Taiwan Stocks Back Near the Quarterly MA: High-Level Volume, Foreign Selling and Investment Trust Support
TL;DR: Taiwan stocks are back near the quarterly moving average: if the index holds it, individual stocks still offer plenty of opportunities, and if not, take profits first, because foreign selling pressure persists but investment trusts are still propping up the market, and leverage is no higher than during the July crash.
Key ideas
- Heavy volume at a high level without a breakout is a warning sign: Tai-Join (6269) posted its first heavy volume today, larger than before, yet it did not lift the price, so it must open higher tomorrow, and if it opens lower and can't recover within half an hour, forget it; on selling, selling around a 10% pullback from the high after a big rally is already very good, with no need to chase the top price.
- The quarterly moving average is the defensive line for this move: MediaTek pulled back to the quarterly MA and showed signs of holding, so IP and IC design stocks should be watched along with it; AVC was accumulated after returning to the quarterly MA, and the quarterly MA low is the swing defense point; for Taiwan Union Technology, there is no need to be too nervous as long as the quarterly MA holds.
- Foreign selling is due to the Taiwan dollar weakening more than other currencies, and since Taiwan had also just hit new highs, being sold is perfectly normal; foreigners have already sold NT$1.96 trillion, but no one knows how long they will keep selling.
- Investment trusts are the side propping up the market: foreigners are still selling heavyweights like Delta Electronics, but it was somewhat hard for them to sell today; if foreigners stop selling, Taiwan itself is very rich and it is enough for investment trusts to keep buying; Compeq has good chip positioning, with investment trusts and foreigners both on the buy side.
- The movement of disposition stocks reflects market sentiment: after Dajia entered disposition status it could not be locked down, and some people bought low when it opened up, meaning those trading disposition stocks this time still hold their own views.
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Section summaries
0:35High-Level Volume and the Key for the Index
Taking Tai-Join (6269) as an example, it keeps failing to break through at a high level because holders have been trapped for so long above; today was its first heavy volume, larger than any before, yet it did not lift the price, which is a warning sign. If the index can reclaim the key level, there are plenty of stocks like this; if it can't, it is safer to pocket profits first. Tomorrow it must at least open higher, and if it opens lower and can't recover within half an hour, forget it.
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2:15Selling Mindset and Sector Pullbacks
Selling around a 10% pullback from the high after a big rally is already very good, with no need to chase the top price; Elite Material sold at a relative high above NT$800, yet retail investors often insist on selling at the very top. Taiwan Union Technology was priced around the 20th CB. The ABF and CCL groups pulled back slightly from highs, still acceptable relative to other stocks; MediaTek has also pulled back to the quarterly moving average.
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3:25Quarterly MA Battle and Chip Positioning
After MediaTek returned to the quarterly moving average, the line has not broken and signs of holding have started to appear, so IP and IC design stocks should all be watched along with it. Investment trusts are still propping up the market and foreigners are still selling heavyweights (including Delta Electronics), but it was somewhat hard for them to sell today; if foreigners stop selling, Taiwan itself is very rich and it is enough for investment trusts to keep buying. Compeq ranked 10th in intraday odd-lot trading volume with good chip positioning, with investment trusts and foreigners both on the buy side; the next wave only meets trapped holders around NT$300, leaving about 20% of upside room, and the speaker wants to bet on this stretch.
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4:40Chip Radar and Quarterly MA Defense
The chip radar shows institutions kept adding during this index pullback: Gold Circuit Electronics added 0.45% of weight, and cooling name AVC added even more; AVC seems especially favored by major sovereign funds, so accumulating after its return to the quarterly MA makes sense. For those wanting to bet on high-priced cooling stocks like AVC, the quarterly MA low is indeed the swing defense point; the ally is the investment trust and the opponent is foreigners. Foreigners are still selling Taiwan Union Technology, but there is no need to be too nervous as long as the quarterly MA holds; if foreigners turn, investment trusts will be forced to come back and buy.
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5:45Weaker Currency and Foreign Net Selling
The speaker thinks the Korean won stopped weakening while the Taiwan dollar weakened more, which is why foreigners have been selling heavily lately. Japanese and Korean markets have relatively returned to their July crash levels, with no need to sell more, whereas Taiwan had still hit new highs before, so being sold is perfectly normal.
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6:10Oil, Taiwan Dollar Pressure and the Lower Shadow
Oil, Bitcoin and the Taiwan dollar have all moved near prior highs or lows, pressure zones; if the central bank steps in, these levels will all meet pressure and the moves may be pushed back again. Taiwan stocks have just returned near the quarterly moving average and printed a lower shadow for support, which may let foreigners hold off for now and let the market consolidate for 2–3 days; no one knows how long foreigners will keep selling, but they have already sold NT$1.96 trillion.
▶ Watch from here7:00Disposition Stock Moves and Big-Player Mindset
After Dajia entered disposition status it should have been locked down, but it can no longer be locked; the speaker thinks some people will buy low when disposition stocks open up, and whether that works remains to be seen. Wayhua (disposition stock as well) opened lower in the morning, was pushed down and then pulled back up, but it is already the 5th red candlestick, so the short-term pullback is quite obvious; the 2 stocks move similarly, meaning those trading disposition stocks this time still hold their own views.
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10:00Flying Cars and International Macro
Extending from comment interaction, the speaker asked which they would choose between the new Porsche sports car and Tesla's new Roadster; the speaker admires Musk somewhat, thinking the scene in The Fifth Element where cars all fly in the air already has a prototype, and humanity will sooner or later get there. Back to Taiwan stocks, there are many big events this week: the market is back at key support, Japan and Korea are back at their July crash levels, but leverage is currently no higher than back then and the international situation is also okay, so whether it can stabilize here matters quite a lot. The Korean rate meeting is somewhat less important; next come US earnings reports, and many stocks have already fallen first, so could there still be disappointments?
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11:35This Week's Schedule and Show Preview
A preview of this week's schedule: taking a day off tomorrow, possibly to visit the PCB exhibition, so the livestream will be either tomorrow or the day after, with the time not yet set.
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