Stocks are showing signs of bottoming out.

Investors are monitoring the market at a securities firm in District 1 ( Ho Chi Minh City) during a declining trading session in October 2024.

The VN-Index fell 1.8% in October. This month, the market has also dropped by approximately 3.8%. The correction that began last weekend and extended into the first three trading sessions of this week significantly impacted overall sentiment. Stocks gradually retreated towards the crucial support level of 1,200 points, both technically and psychologically. The VN-Index returned to the same level as at the beginning of August. Liquidity has dropped to low levels, indicating that investors are still waiting for more attractive price levels before deciding to invest further.

Mr. Nguyen Viet Duc, Director of Digital Business at VPBank Securities (VPBankS), believes this development is not entirely unexpected. Looking back over the year, the market experienced a major surge at the beginning, which quickly ended in March, with a few notable events in June. After that, from June to November, the stock market consistently trended downwards.

"Based on various bottom-fishing methods, opportunities are very close for investors," he stated.

This expert points out that the market is showing several signs of this. First is the P/E ratio (price-to-earnings ratio). In any bad market, no matter how bad, the P/E valuation only falls to around 10-11 times. This happened in 2016, before the strong bull run of 2016-2017, and again in 2020, before the Covid-19 wave, and again in 2022 when the bond market story emerged. Currently, the VN-Index is at 11 times according to the P/E ratio.

Based on the P/B valuation (market price to book value), the market will have some strong support points at 1,155. If the market reaches this area, Mr. Duc believes a rebound will occur.

The final method relies on the Fear Index (RSI). A 20-25% drop in the number of stocks trading below the RSI 30 level represents a high level of market fear. Before the current decline, the chart was at 10%, and he believes that after the November 19th session, it may have risen to 20% and will quickly reach 25-30%. Looking at history, during the most recent panic market in 2022, the number of stocks trading below the RSI 30 reached 50%. Under normal circumstances, a 30% drop in this percentage indicates a rebound.

At the 1,200-point level, the analysis team at Rong Viet Securities (VDSC) believes that the support signal is not yet clear. However, if the market enters the oversold zone below the aforementioned threshold, it may test the momentum of capital flows. "The supply and demand signals in this oversold zone will impact the subsequent movements of stocks," the VDSC analysis team predicts.

These predictions were gradually validated during the trading session on November 20th. In the morning, the VN-Index fell below the 1,200-point mark as massive selling pressure emerged. However, the market did not panic and improved after just an hour as bargain-hunting demand joined in quite actively.

By the end of the session, the index had risen above 1,216 points, an increase of more than 11 points. Liquidity improved significantly, recording over 17,800 billion VND, 34% higher than on November 19th.

Vietcombank Securities (VCBS) believes that on the daily chart, the RSI indicator is trending upwards from a low point; however, the MACD (Moving Average Convergence Divergence) indicator has not yet given a bottoming signal, suggesting that the probability of volatility has not been completely eliminated. Nevertheless, with a significant increase in liquidity and active participation from buyers, this analysis team expects the market to consolidate sideways to regain momentum and gradually return to equilibrium.

In the long term, Dragon Capital believes the likelihood of further stock market declines is low. The fund management company assesses that a stronger US dollar could prolong the withdrawal of capital by foreign investors from emerging markets to the US. However, third-quarter earnings for listed companies remain positive. Specifically, 80 companies in their watchlist recorded net growth of 19% year-on-year.

The above results demonstrate the resilience of the stock market and reinforce expectations of 16-18% growth next year. The aforementioned companies are also trading at a projected P/E ratio of 11.6 times, compared to the average of 13.9 times over the past five years. Combined with the positive outlook of domestic investors, Dragon Capital remains optimistic about the future market situation.

While acknowledging that opportunities are emerging, VPBankS experts also emphasize the importance of knowing how to buy at the bottom. Based on William O'Neil's investment rules, Mr. Nguyen Viet Duc believes there are several points that are suitable for the Vietnamese stock market.

Firstly, avoid buying stocks that are too low. In the case of Vietnamese stocks, high-quality stocks are typically priced at around 15,000 VND or higher. Investors should buy stocks in leading growth sectors.

Secondly, cut losses whenever the price exceeds 8% of the purchase price, without exception. Conversely, investors also need to adhere to selling rules to know when to take profits.

The next rule is to buy when the market index is rising, reduce investments and increase cash when the market is falling. Importantly, don't try to predict the bottom or buy when prices are low, don't argue with the market, and forget about your pride and ego.

VN (according to VnExpress)

Source: https://baohaiduong.vn/chung-khoan-co-dau-hieu-do-day-398518.html