As the fallout from the war between the United States and Iran affects domestic and overseas stock markets, analysts in the securities industry said the market, which had been shaken by event-driven swings, has entered a phase to gauge whether it can return to an upward trend.
DB Securities said in a report on the 19th that the recent global stock market has entered a crucial phase to determine its future direction. The KOSPI ended trading at 6191.92 on the 17th, the previous trading day. It is narrowing the gap with this year's record high (6307.27) set in Feb.
Kang Hyun-gi, an analyst at DB Securities, said, "The stock market has approached its previous peak and has begun to reflect the period after the Iran situation," and added, "If the market so far has been an event-driven market that repeatedly rose and fell on news, now is the time when it will be decided whether it enters an uptrend."
DB Securities emphasized that two indicators should be watched amid this trend. It noted that it is important whether the index does not stay near the peak for long and quickly breaks above the upper band.
Kang said, "It is common for the index to stall temporarily as many investors who bought near the peak sell en masse when their losses are recovered," adding, "However, if expectations for a rise are maintained, selling pressure is limited and new funds flow in." As a result, the time the index moves sideways shortens and the momentum for the index to rise strengthens.
Whether trading volume increases was also presented as a key criterion. That is because if volume rises along with the index, it can be seen as market participants forming a consensus on the upward trend.
Kang said, "If trading volume rises alongside heightened volatility caused by an event such as war, it can be seen as agreement among many investors that this shock has not damaged the medium- to long-term upward trend."
Jesse Livermore, the American investor known as the father of "trend trading," described this phase as the stock market's "psychological time." He emphasized that a buy strategy is effective when the market shifts into an upward trend.
DB Securities advised that if the upward trend gains traction going forward, investors should focus on sectors that have already shown a preemptive rally. Representative examples include renewable energy, semiconductors, construction, and food and beverage.