After Taiwan Stock Turnover Tops 1 Trillion: Judging a New High, and Trading UMC, Connectors and Chip Packaging/Testing
TL;DR: With TAIEX turnover above 1 trillion and UMC leading, the speaker raises his equity exposure to 75% but does not go all in, because a breakout to a new high must be judged by volume and whether a long upper shadow forms; only a break above 1 trillion without a long upper shadow makes it a real new high, so he keeps reserves until then.
Key ideas
- The Mid-Autumn Festival turning point has nothing to do with Taiwan stocks; what matters is the volume on the day of the new high: above 1 trillion with no long upper shadow means this breakout is real. The OTC market still has 6–7 upper shadows, so he raises his cash level from 60–65% to 75% but does not go all in, since going all in after a breakout or a pullback test is still in time.
- UMC is worth at least 160 this year and 200 next year, so he took profits in batches when it touched 160 without locking limit-up, and he does not recommend chasing above 160. For its group company Chipbond, whose gold bump packaging gives it sufficient base value, he added around 215 and keeps holding; short-term resistance is at 245–255.
- There is no need to fear the quarterly moving average too much: both the TAIEX and the OTC market are already above it, and good stocks eventually get through it. Groups with second-half prospects such as ABF, PCB and memory need not fear resistance there; the ideal chart pattern is the 5-day, 10-day and monthly averages in a bullish alignment after the stock leaves the quarterly average.
- CREDO's strong earnings lifted the connector group: Aces, Speed Tech, Cheng Uei and Liang Wei all crossed the quarterly average together, showing group behavior; limit-up stocks moving from small stocks under 100 to stocks priced 100 to over 400 makes the rally look real. He calls Kaori and Aces the BE Duo and will exit if they fall below the 10-day average.
- An active ETF fully loaded up on Ardentec, and he fully loaded up on Chipbond at the same time; with packaging and testing back, there is little need to worry about semiconductors. Before TSMC's investor conference next month, he reminds people to position early in equipment and facility-engineering stocks; if the Taiwan dollar keeps appreciating, watch AUO, the top net-buy stock among big players.
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Section summaries
2:45UMC Leads Turnover Past 1 Trillion
UMC was strong in the night session and lifted the morning open. Intraday turnover was projected at only about 8000 yi (hundred million), but the last auction added volume and pulled up the close, so TAIEX turnover ended at 1.075 trillion and OTC volume rose to over 2600 yi. The OTC close moved above the high point since the big drop in July; with the previous high not far away, another rise of a bit over 2% in the index could set it on course toward 48000.
▶ Watch from here4:45Raising Exposure and PCB Stopping Its Fall
Boss Lei had cut his holdings to 60–65%, but seeing OTC and TAIEX volume already above 8000 yi today, he raised his cash level to around 75%, though not all in, because the OTC market still has 6–7 upper shadows and he is unsure whether they can be cleared in one go. He believes the bad news of rate hikes was fully priced in before yesterday; upstream PCB names Co-Tech and Taiwan Union stopped falling today after a big black candle yesterday, and one should not let a risk 3 years away affect today's share prices.
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7:45Taking Profit on UMC and Positioning in Chipbond
Boss Lei believes UMC is worth at least 160 this year and 200 next year, so when it touched 160 intraday without locking limit-up he sold in 2 market orders to take profits; most members exited around 5%–8%, and those who did not buy the add-on order can set their profit-taking point near 150. Investment trusts, foreign investors and margin traders have not given up their positions, so there may be a chance to buy back. For its group company Chipbond, he likes the base value of its gold bump packaging; he added today around 215 and still holds it.
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11:35Real vs. False New Highs and Volume
Chipbond's selling pressure has been largely absorbed, and new pressure only appears at 245–255, which is his short-term target price; Chipbond has risen back more than 100% since the crash, which ordinary people cannot hold through, and he likens the lack of patience to anxiously flipping meat at a Mid-Autumn barbecue. OTC has 6 upper shadows, so a new high is possible but he does not know whether it will keep going; hence he stays at 75% rather than all in, since going all in after a breakout or a pullback test is still in time. He thinks the Mid-Autumn turning point has nothing to do with Taiwan stocks: if turnover at the new high is below 1 trillion, it may be a false breakout again; if it breaks 1 trillion and no long upper shadow forms that day, this new high is real.
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14:05Impact of the Bank of Japan Rate Hike
He rejects the claim that the Bank of Japan's rate hike hurts stocks: Japan has long had a policy of steady hikes, so it is not this hike that affects the market; as long as a hike helps the currency appreciate, it is actually good for stocks. Japanese stocks kept rising after 11 o'clock, and if Japan and Korea can rebound, Taiwan should keep rising too; even if it does not, there are good individual stocks to trade, like the recently strong connector names. Also, UMC's ADR rose 8.6% last night; he placed an order in the morning to catch a short-term move and failed, but got its group company Chipbond, and he did not pick Unimicron because it is more affected by PCB.
▶ Watch from here15:25Buying Dips in Batches and the Quarterly Average Strategy
He says in a market like yesterday's he can buy the dip himself, but only at a lower cash level and slowly a few lots at a time; he cannot do dynamic batching for members or TV viewers, because a single order is already 5%–10%, whereas professionals adding to a single stock in batches up to 5%–10% is perfectly normal. Kinsus, Unimicron and Nan Ya PCB are near the quarterly average, a very good position; the ideal is the 5-day, 10-day and monthly averages in bullish alignment after leaving the quarterly average, like Prosperity Dielectrics, Walsin Technology's affiliate Holy Stone and Nan Ya. ABF, PCB, memory and other groups with second-half prospects need not fear resistance at the quarterly average, because both the TAIEX and OTC are already above it, good stocks eventually get through it, and trapped volume near the quarterly average has been digested several times, so the next rise will be a real one.
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20:00Connector Group and the BE Duo
CREDO's earnings were strong; BizLink-KY is strong, so connectors follow. Aces' Q2 revenue hit a record for the period, its AI product share jumped, its high-speed connectors ship in all specifications and have entered a US cloud giant, and it has a BE major customer; Speed Tech's AI power revenue share is to rise to 48%, and its new Thailand plant is nearly done. Aces, Speed Tech, Cheng Uei and Liang Wei, all connector names, crossed the quarterly average together, showing group behavior. He reminds that recent trading is faster, so exit if the candlestick looks wrong, since the market has not truly made a new high and there will be no super big-wave runners. On the limit-up/limit-down radar, yesterday's limit-ups were mostly small stocks under 100, which looked like a fake rally; today stocks priced 100 to over 400 appear, which looks like a real rally. After Aces' repeated volume-washing, he named Kaori and Aces the BE Duo, using the 3 high-volume candlesticks as the midpoint, and will exit if they fall below the 10-day average.
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29:35Stock Themes and Pullback Entry Points
Chang Ho plunged yesterday and locked limit-up today; he thinks power plant construction is slower, so it has turned to a solar supply chain theme. Chia Chi is also a connector theme and crossed the quarterly average today, with the whole connector group crossing together. With TSMC's investor conference next month, he reminds people to position early in equipment and facility-engineering stocks; Marketech touched limit-up intraday, and packaging and testing names Sigurd and Ardentec also hit limit-up today. He likes Hoyi, but branch-level sellers already appeared yesterday and the company itself came out to clarify, so speculative sentiment is heavy; he suggests buying after it returns to the 10-day or monthly average. Yatung hit limit-up yesterday and limit-down today, so short-term holdings are messy; wait for it to pull back to near the 10-day average and hold before buying back or adding.
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33:45Taiwan Dollar Appreciation and AUO
The Taiwan dollar turned to appreciation today; if the rise continues, watch what big players buy. The top net-buy stock among big players is still AUO, with foreign investors continuing to buy and margin traders trimming slightly; it rose into the close today, and the next step is to challenge the resistance at the previous high of 34. AUO was also the top stock by turnover today. He also likes Powerchip's slow climb, and ASE Holdings rose a bit over 3% today and may catch up; TSMC's turnover value returned to first place, which he considers very healthy.
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36:30Disposition Stocks and ETF Stock Picking
He admits that he was stopped out of Hua Hsing Optical during its disposition period when it happened to hit his stop-loss price. Chang Ho and Hua Hsing Optical, flagged yesterday to exit disposition today, are on the list; entering disposition today are Co-Tech and Giga Solar's peer Juyou Tech, and exiting tomorrow is Quantum Wafer (Wisdom), and he is watching all of them. The active ETF 00981A fully loaded more than 1000 lots of Ardentec yesterday in one go, so he looked at the same group and fully loaded Chipbond this morning (around 215). With packaging and testing back, there is little need to worry about semiconductors. Nanya Technology has finished retesting the chips from its left-side peak, and he thinks it could possibly reach above 600; Phison has also risen back above the quarterly average.
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40:10Adding to Strong Stocks and Member Results
Kaori and Taiyo may price a convertible bond (CB) from the end of September to October, and shares do not necessarily rise much during pricing; if Kaori heads toward 2000, there may still be chances to buy back along the way, and if it truly reaches 2000, the other BE stocks will not be bad either. For a strong stock that has left the quarterly average for some time, a return to the 5-day average is an opportunity to add. Among members following his trades, a single lot of UMC reached 43%, and Aces rose another 17% after the volume wash, a profit of 23000 per lot. Tomorrow, watch whether the Taiwan dollar keeps rising, whether the market can keep volume above 1 trillion, and whether connectors, packaging and testing, and UMC can keep rising; if it rises for only one day and leaves an upper shadow, be careful.
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