Market Update [April 02] – VN-Index closes lower after “bull trap”

02/04/2019 16:48

Report: Market Update

On Tuesday (April 02nd), although rising nearly 8 points at one point, however, the VN-Index lost the ground to close at its lows of the day due to high selling pressure in large caps. In particular, BID, SAB, VCB, VHM, VIC, CTG, PLX, HDB and BVH were the large-cap losers, offsetting the small gains in VNM, GAS, MSN, HPG, NVL, MBB and FPT. By the closing bell, the VN-Index lost 2.72 points (-0.28%) to close at 985.81. Trading volume was nearly 240 million shares, worth VND4,900 billion. Breadth was negative, with losers topping gainers 150 to 142. Foreign investors net bought VND260 billion on the HSX, mainly in MSN.

In view of technical analysis, the VN-Index’s chart shows a long red candlestick at the resistance range of 990 – 1,000, which is a sign of negativity. Therefore, we believe that, in a negative scenario, the VN-Index will test the nearest support range of 970 – 980, the next support range is forecast at 950 – 960. In a positive scenario, if the index rebounds, the nearest resistance range of VN-Index will be forecast at 990 – 1,000, at which investors can sell a part of the existing short-term portfolio.

We recommend investors to be careful with fake technical signals. The short-term trend of VN-Index is still a downward trend, and can only be reversed when the index surpasses the resistance range of 990 – 1,000. Based on Kelly formula, the recommended proportion of the portfolio is 90% cash/ 10% stocks. Tail risks include black swan events.

Please see the attached file for more details.