The stock market quickly had two impressive recovery sessions after a historic decline due to the impact of world oil prices and escalating conflict in the Middle East.
However, market liquidity tends to decrease, showing that cash flow is still quite cautious. In that context, many investors are concerned that the current increase may just be a "bull trap", instead of a signal confirming the sustainable recovery trend of the market.
Analysts from ABS Securities Company believe that the stock market is entering a sensitive phase when many technical signals show that adjustment pressure is still maintained. In that context, short rallies may only be "bull traps", so investors need to trade disciplinedly and patiently wait.
According to ABS, the short-term trend of the market is facing certain risks when technical factors show that the index is starting to form downward waves. The position of the price is currently below the sliding average lines, while the low peak structure is gradually appearing. In recent trading sessions, selling pressure has appeared more with a sharp decrease margin accompanied by increased liquidity, reflecting that selling pressure on the market is showing signs of strengthening.
In addition, factors triggering stock selling activities are appearing more clearly in strong declining sessions, when stock prices may decrease rapidly in the session without seeing price protection factors at the support levels of smart cash flow. Cash flow on the short-term trading framework is still maintaining a downward trend, showing that buying demand is relatively weak.
Dr. Nguyen Duy Phuong - Investment Director of DG Capital - assessed that the market is recovering but liquidity is not improving, even gradually decreasing when prices increase, showing that chasing buying demand is still weak and investor sentiment is not ready for a new upward cycle. Therefore, the recent increases cannot be seen as a signal confirming the trend, but mainly still have the nature of a technical recovery.
In such rebounds, the market often experiences fluctuations when investors take advantage of selling to lower margin and reduce leverage. When selling pressure is still present but liquidity is low, it shows that buyers are not ready to pay higher prices, thereby increasing the risk of investors falling into a bull trap," Dr. Phuong said.
At the current point area, the market with a low probability will move sideways and accumulate for a few more sessions before determining a clearer trend. However, many experts lean towards a less positive scenario that VN-Index may return to test the bottom again before forming a new trend.
ABS Securities Company offers two scenarios for VN-Index in March.
In the first scenario, the market appears waves pushing down when the long-term trend runs out of gains. If the market closes the week without holding the 1,740 point mark, it is very likely to create a downward structure and move to the 1,586 - 1,606 point zone in a supply-demand imbalance when the selling force to release margin loans is activated. At that time, it is easy to have "bull trap" sessions to lure buyers to anticipate a short recovery.
In the second scenario, in case VN-Index closes breaking the support zone of 1,586 - 1,606 points, especially if the conflict in the Middle East lasts and oil prices remain at a high level for a long time, negatively affecting inflation and global economic growth prospects. The adjustment nature of VN-Index is completely compared to shocking declines in history. At that time, support of 1,486 - 1,540 is the basis for whether the current adjustment decline is healthy enough for the period after April, May or not.
ABS believes that the market in the current period does not have enough factors to consolidate a sustainable upward momentum, while risks are showing signs of increasing. Therefore, investors are recommended to manage trading disciplinedly, prioritize protecting investment results and only consider buying when clear trading signals appear in important support areas.
