Taiwan Stocks Approach Seasonal Line for Major Washout, 203 Billion NT Reduction Not Enough? Long-Term Funds Quietly Positioned at 'This Point'

Taiwan stocks fell 380 points today, influenced by TSMC's (2330-TW) late-session adjustment pressure. Trading volume shrank to approximately NT$944.3 billion. Although the market attempted a rebound in the early session, the volume was clearly insufficient, and the technical indicators showed a lack of upward momentum. The market is facing dual pressures of profit-taking at lower levels and locked-in losses at higher levels, making it easy for the index to fall back into a volatile structure.

The OTC index, after consolidating at the seasonal line support yesterday, showed relatively strong performance today, indicating that the market is not entirely bearish but has entered a stage of fund rotation and increased difficulty in stock selection. Recently, the New Taiwan Dollar has shown some support around the 32 whole number mark, but the net short positions in futures have not decreased significantly. Additionally, the margin trading balance has increased slightly again, making the overall data a mix of good and bad.

With the recent war noise not yet completely eliminated and the U.S. earnings season approaching, the market has entered an important period for testing the long-term bottom. Under the current neutral data structure, Mr. Chen Zhi-lin suggests maintaining a neutral holding position, focusing on cash transactions, and not using margin leverage. This is the most stable strategy for facing a volatile market. The real key lies in the subsequent revenue and profit figures of AI-related indicator stocks. Only after the financial reports and IR information are released can the market valuation model have the opportunity for substantial correction, which will also help sustain the medium-to-long-term bullish view.

In the early session, the ABF substrate group turned bullish as a whole, but this wave of substrate stock prices experienced violent fluctuations. The main reason was that foreign institutions recently focused on adjusting Taiwan's large-cap positions, causing interference in the capital side. The benchmark company Hsin Hsin (3037-TW) is a large-cap stock, and the capital side naturally bears the pressure first. In addition, the New Taiwan Dollar exchange rate further depreciated during the session, and the pressure of capital outflow is still present. In the short term, time is needed for digestion and capital sedimentation. However, returning to the industry's fundamentals, the long-term structural shortage of high-end ABF production capacity has not changed. Therefore, strategically, one only needs to patiently wait for low-level opportunities with a safety margin. On the other hand, Largan Precision (3008-TW) will hold its IR meeting this afternoon. The market is focused on whether new technology applications and high-end smartphone lens procurement will recover. If positive industry prospects are released subsequently, the optical group may become the focus of the next technology stock rotation. Market fluctuations and washouts are not to be feared; what is to be feared is the lack of discipline. Investors are invited to download the Chen Zhi-lin Analyst APP, where real-time information will be shared first. Every week, the credit code concern list will be updated to help you avoid risks and seize opportunities.

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Article source: Chen Zhi-lin Analyst / Kai Xu Investment Consultants

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