Stock market: Continue strong growth or face correction?

The Vietnamese stock market had a positive trading week but also began to pose risks, when the VN-Index successfully surpassed the 2022 historical peak and set new highs.

At the end of the week, the market witnessed strong profit-taking pressure along with a record net selling momentum from foreign investors. Accordingly, experts said that although the growth trend is still maintained, investors should still be cautious and consider restructuring their portfolios to cope with the possibility of short-term adjustments. Last week, VN-Index continuously conquered important resistance levels.

*The stock market entered a period full of pressure but also full of opportunities, when the VN-Index surpassed its historical peak. Illustrative photo*

Saigon-Hanoi Securities Company (SHS Research) assessed that the market was supported last week by three main factors. First, liquidity improved significantly with cash flow increasing in both scale and scope, especially concentrated in the leading group. Second, positive macro factors from the draft decree supporting innovative start-up businesses with tax incentives are expected to create more momentum for economic growth and the capital market. Third, the consensus of increasing points from many major stock markets in Asia has reinforced the optimistic sentiment of domestic investors.

Experts from Kien Thiet Securities Joint Stock Company (CSI) said that, looking at the weekly chart, VN-Index has had 2 consecutive weeks of increase, but the increase range of the past week has tended to slow down when the increase was narrowed by the decline at the end of the week. Although the positive trend is still dominant on the weekly chart, the sell signal has appeared in the decline at the end of the week, so it is necessary to be more limited in new buying positions.

SHS Research commented that after a week of sharp increases, the index surpassed the historical peak of 2022. Accordingly, the market maintained a positive trading week with increased liquidity. However, VN30 is approaching the 1,800-point mark, a very sensitive price zone, corresponding to an increase of about 60% compared to the bottom in April 2024. History has never recorded a continuous increase of VN-Index or VN30 with such a strong amplitude without going through a significant correction. Investors need to closely monitor developments, review portfolios, consider closing weakened stocks and control short-term proportions. Reasonable cash flow rotation will help preserve results in the context of the uptrend still remaining, but the risk of correction is increasing.

Technically, the VN-Index is still maintaining above the psychological support level of 1,600 points, with the next support level at 1,565 points. The 1,650 point area is currently a major barrier, while the VN30 is touching the resistance zone of 1,800 - 1,830 points. Therefore, a successful scenario of overcoming the 1,650 - 1,665 point area could open up new room for growth to 1,680 - 1,700 points. Conversely, if selling pressure at high prices prevails, the market could enter a technical correction phase, helping to relieve pressure and create a foundation for a more sustainable uptrend.

Notably, market liquidity set a new record of VND259.5 trillion on the HoSE with an average trading volume of more than 1.75 billion shares per session. Foreign investors continued to sell strongly with VND8,217 billion here.

Therefore, SHS experts recommend that investors should be extremely cautious and closely monitor current market developments. Although the VN-Index is still growing, many stocks after a period of strong growth are at risk of peaking and possibly ending the trend of sudden strong price increases.

Source: https://congthuong.vn/thi-truong-chung-khoan-tiep-da-tang-manh-hay-doi-mat-dieu-chinh-415803.html