Not Buying the Dip After the Night-Session Crash: Wait for Objective Conditions, Not Feelings
TL;DR: After a night-session crash that at one point fell about 4000 points, the Taiwan market still closed down a sharp 1873 points, so Boss Lei is not buying the dip: foreign investors sold a net 911 億 (less than the day before), but only one of six objective conditions (oil) has been met, and he still wants foreign selling to shrink and margin forced liquidations to be fully flushed out.
Key ideas
- The night session crashed and at one point fell about 4000 points; the market still closed down a sharp 1873 points on turnover of 1.24 兆. However the session moved, the result was a big drop, so he still did not buy the dip today.
- Dip-buying depends on objective conditions, not feelings: of the six conditions, only oil has come back, and foreign investors are still selling. He mentioned that foreign net selling needs to fall within 300 億 before buying support is relatively strong.
- Margin forced liquidation is the main cause of short-term selling pressure: each day he checks stocks with a margin maintenance ratio below 135% and watches whether limit-down locks open and close repeatedly. If they open, volume has flushed out the sellers; if locked with no volume, the flush is not yet done.
- Until the Taiwan dollar appreciates, foreign selling is hard to stop, and the exchange rate and the US dollar index are corroborating clues to foreign investors' moves. Funds selling tech stocks to buy telecom and financials also carries risk, since if retail investors do not take over, money may be pulled out.
- If you really want to buy the dip, he suggests buying the index or index futures rather than individual stocks, since buying individual stocks near a wave of margin liquidations tends to fail. The bottom is near, but it only counts once foreign investors stop selling and the technicals turn stronger.
Section summaries
0:00Night-Session Plunge and a Cautious Response
The night-session Taiwan index futures at one point fell 3000 points, and the Philadelphia Semiconductor Index also plunged, leaving Boss Lei sleepless all night. During the session it fell as much as about 4000 points, then pulled back to a drop of nearly 2000 points at the close. He said he had never seen a drop like this in his life and that it is probably a record, so he still decided not to buy the dip today.
▶ Watch from here7:20Market Plunge and Foreign Net Selling
The market still closed down a sharp 1873 points, close to 2000 points, with turnover of 1.24 兆 (he considers a reasonable level to be about 1.2 兆 to 1.3 兆). Many OTC stocks were still locked limit-down. Foreign investors net sold 911 億, much less than the day before. His own equity exposure is still above 50%, so he is not buying the dip yet.
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9:19Foreign Selling Pressure and Adjusting Strategy
Foreign investors net sold about 900 億, margin buyers no longer have the strength to absorb it, and the Taiwan dollar has not appreciated. He believes the normal scenario is for limit-down stocks to open and close repeatedly in the morning rather than being locked with no volume; otherwise margin liquidations cannot be sold, and retail investors will face consecutive forced liquidations the next day. His strategy is to win on corrections, not on expectations.
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10:24Margin Liquidations and the Swing Low
He admitted he could not sleep at night, felt for his members, and even thought about selling all his stocks, but such thoughts must be pulled back quickly; it is training. He deliberately let a wave of margin liquidations play out: small liquidations began yesterday, and today was the big one, clearing out floating shares. Short-term selling pressure comes mainly from margin. His view is that if foreign net selling falls within 300 億 and investment trusts can buy more than 200 億 a day, the market will easily be carried back up.
▶ Watch from here22:10TSMC Limit-Down and the Plunge in Thousand-Dollar Stocks
TSMC hitting limit-down is quite rare; the last time was during the tariff period. Six thousand-dollar stocks were also locked limit-down, with retail investors eagerly buying. The host joked with comparisons to Matsu's blue tears and will-o'-the-wisps, easing the tense mood in the market.
▶ Watch from here23:22Defensive Stock Risk and Watching the Exchange Rate
Funds are keeping high equity exposure, selling tech stocks and switching to telecom and financials, but when the market improves they may pull money out, and there is still risk if retail investors do not take over. Until the Taiwan dollar appreciates, foreign selling will not stop, so it is not the time to buy the dip.
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30:07Reading the Exchange Rate and the Margin Ratio
Historical charts show the stock market recovering after the Taiwan dollar exchange rate hit a high. Yesterday margin balances fell 205 億. If the ratio of the margin decline to the market drop falls below 2, the chips are healthier and the market has a chance to stabilize, but that does not mean an immediate end to the decline.
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32:15Margin Maintenance Ratio and Individual-Stock Liquidations
Each day he screens the top 200 stocks by turnover for those with a margin maintenance ratio below 135%. GlobalWafers' liquidations are nearly over, with the stock down from 1600 元 by almost half; if limit-down opens, it means the margin liquidations have been flushed out cleanly.
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33:12Investment Scenario and Adjusting Targets
He admitted he is not especially skilled either: recently, mainstream stocks he picked were easily hurt badly, but they also come back quickly in rebounds. He is not fully certain about what follows; his current scenario is some volatility next week, then a push higher.
▶ Watch from here33:36PCB Margin and Conservative Trading
When the margin maintenance ratio has just fallen below 135%, some people add money and some do not; usually liquidations run for two days, with forced liquidation on the second day. He saw a Japan-related electronic materials stock go from about -16% to +2% in a day, which he takes to mean the chips were cleanly liquidated, since otherwise a stock could not rally so much in one go. He stressed that these PCB stocks must rise, otherwise the whole industry will not do well; Korea is still breaking lower and Japanese stocks are also weak, so he did not dare buy the dip today and is just defending.
▶ Watch from here35:02Indicators to Watch and Foreign Investor Moves
He thinks it is enough to just defend now, and when a rebound comes it will also be quick. He repeatedly reminded people to watch the Taiwan dollar: if it is still weakening and the US dollar index still rising, that is bad for Taiwan stocks; West Texas crude has come back somewhat, but overall is relatively stable. Those holding cash-bought shares need not worry too much, but the objective conditions are not yet met.
▶ Watch from here39:01Dip-Buying Conditions and Waiting for Signals
He reviewed the conditions he wrote to members a few days ago: first lower your equity exposure, and act only once the conditions are met, with a "beyond the range, not beyond the low" approach; if you buy the dip every day after the market breaks below the quarterly moving average, you will surely fail every day. He had originally hoped for foreign investors to turn to net buying of 500 億, then lowered it: oil back to around 100 or below, each day's close higher than the previous day, and ideally the Taiwan dollar weakening to 32.5 and then appreciating to below 32.
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40:32Objective Basis and Disciplined Execution
He reminded everyone that money saved for you is an invisible contribution, as important as administration, finance and sales in a company; the money members save by not chasing recklessly is a real gain too. He did not buy the dip today because he must follow the objective conditions he has repeatedly stated these past days; if he truly violated them, he would say so, but it does not look necessary now. Objectivity is like an X-ray: after rehab, improvement is whether range of motion has gotten better, not just a subjective feeling of "it hurts here, it hurts there."
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42:38Objective Data and Dip-Buying Conditions
Subjective feelings are unreliable, just as everyone defines "how sour" differently; a good coach measures at the limit and records data, which is what objective means. Back to dip-buying: you act only when three of the six conditions are met, and currently only oil has come back while foreign investors are still selling, so there is no rush to buy the dip.
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49:36Limit-Down Unlocking and Rebound Signals
Limit-down stocks such as Win Semiconductors and Holy Stone opened one after another during the session, and opening and closing repeatedly means volume has flushed sellers out. He judges that next Monday and Tuesday are quite likely to be the first low of this period, so do not rush to cut everything today, so as not to miss the rebound as happened in July. Yuanta Taiwan 50 and TSMC were also pulled up from limit-down; even with foreign net selling of over 900 億, there was still buying that lifted TSMC off limit-down, and he joked that he has gained a new life skill of "unlocking TSMC's limit-down."
▶ Watch from here50:37Green Light Joke and Index Dip-Buying Advice
He compared the red-and-green flashing of limit-down screens to Stefanie Sun's song "Green Light," and the talk moved from auroras to Matsu's blue tears. Buying individual stocks near a wave of margin liquidations tends to fail, so he suggests buying the index or index futures instead, with TSMC and MediaTek as the standard dip-buying picks.
▶ Watch from here1:00:02Watching Bottom Conditions and Closing the Show
He thinks the bottom is about here, but you must wait for foreign investors to stop selling and the objective conditions to appear: with three conditions met you can put in some money, with four more, and with all six you should go in, "even if fooled, willingly." Finally he used the analogy "when picking a boyfriend, pick a handsome one": technicals turning stronger (the exchange rate and foreign net selling strengthening) is the real signal that cannot fool you. He then thanked viewers and said see you next week.
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