How to pick stocks in a sideways market?

During the week of September 15 - September 19, VN-Index recorded an effort to conquer the old peak of 1,700, but was not successful and moved to a sideways state, struggling with a wide amplitude of about 30 points. Liquidity during the week remained at a level lower than the average of 20 sessions, along with the divergence of cash flow, showing the quietness in trading as well as the cautious psychology of investors.

The large-cap group did not have a consensus to create momentum for the market and maintain the rhythm of the index, mainly thanks to the efforts of Vingroup stocks.

Foreign investors reversed and returned to net selling after strong buying sessions last week, focusing on selling SSI, FPT, and VND.

In the last session of the week, September 19, VN-Index opened with a gap above 1670, but then the index quickly lost steam and gradually slipped back to a tug-of-war around 1,660. The main pressure on the general index was the correction in large-cap stocks; in the VN30 basket, there were 27 stocks that decreased in points. The group of small and medium-sized stocks also recorded a quiet movement, except for some stocks in the Real Estate, Construction, and Electricity groups, such as DIG, NT2, PC1, CII that increased points significantly.

In the afternoon session, VN-Index continued to move in a tug-of-war similar to the end of the morning session before gradually narrowing the decrease to 1,660 thanks to the green color of VIC and LPB stocks. However, in the last 20 minutes of the session, the index suddenly fluctuated strongly and at times decreased to 1640 due to the ETF fund restructuring its portfolio, then rebalanced to near 1660 at the end of the session. Foreign investors sold strongly with a total net value of VND 2,822.88 billion, focusing on selling VHM, FPT, and VIC.

At the end of the session, the VN-Index closed at 1,658.62, down 6.56 points, equivalent to 0.39%. At the end of the week, VN-Index decreased by 8.64 points (-0.52%) compared to the previous week.

VN-Index ended the weekend session with a Hammer candle and slightly decreased by 7 points with a wide divergence. On the daily chart, the DI line decreased while the -DI line increased, but there was no consensus with the ADX line, indicating that the tug-of-war situation will continue in the short term.

In addition, the RSI, MACD, and CMF indicators are pointing down, indicating a weakening in the trend as well as the cash flow, accordingly, VN Index is unlikely to create a new trend in the coming sessions.

On the hourly chart, the RSI indicator is pointing up again; however, the MACD and CMF indicators have not shown any signs of recovery, indicating that the tug-of-war and fluctuations will still exist in the following sessions. However, the DI and ADX lines are pointing up and the -DI line is decreasing; at the same time the general index is consolidating support around 1,650- 1,660 with the increase in demand, so it is expected that the VN Index will soon find its balance.

The VN-Index is in the phase of testing momentum and rebalancing supply and demand with a sideways movement of about 30 points. Cash flow has become quieter and more cautious as investors tend to observe and wait for additional information from the market.

Investors are advised by VCBS to keep a careful eye on market developments and to keep available equities in their portfolios as long as there is no significant selling pressure and the stocks move steadily in the sideways range. Investors can also locate opportunities in stocks that are generating cash flow in recent sessions but have not risen too far from the most recent accumulation price base for the goal of surfing T, or they can choose stocks that are still moving sideways and maintaining an accumulation price base to release exploratory capital when the stock touches support.