Don't Rush to Catch the Bottom! Is Taiwan's Stock Market Crash Over? The Real Buying Opportunity Appears Only When These 5 Key Signals Emerge!

July's Taiwan stock market felt like a rollercoaster ride in the dark. On July 17, it recorded the largest single-day drop in history, and yesterday saw the third-worst plunge ever. Online forums are filled with despair, and many investors are asking: 'Is AI doomed? Should I sell all my stocks?'

Jason Jiang wants to tell you this: every major downturn eliminates a batch of investors—but it also incubates the next group of winners. The darkest hour comes before dawn, and this is often where wealth redistribution begins.

This Isn't a Fundamental Collapse—It's a 'Massive Position Cleansing'

This correction isn't because AI trends have changed or corporate earnings have deteriorated. The core issue is 'position cleansing.' For the past year, Taiwan's stock market has been overheated, with nearly everyone using margin trading and leverage to 'turn small bets into big wins.' This short-term bearish crash specifically targets leveraged investors with high funding costs and weak psychological resilience. When margin calls trigger massive sell-offs, stock prices temporarily decouple from fundamentals.

If you're investing with idle cash, you still have the right to stay in the game. But if you're borrowing money to invest, you've likely already been forced out.

We must understand that Taiwan's stock market has historically followed a 'long bull, short bear' structure. Short-term sharp declines are often just a mechanism to eliminate over-leveraged investors. Therefore, the most important strategy now isn't guessing the bottom—it's 'de-leveraging first, then calmly waiting for signs of stabilization.'

Is It Time to Buy the Dip? Watch These 5 Critical 'Stabilization Signals' Before Catching a Rebound

Although the market has already shown a 'double bottom divergence' (MACD histogram and KD values both showing bullish divergence at lows), indicating the bottom may be near, you must closely monitor the following five indispensable, heavyweight bullish reversal signals to confirm a true turnaround:

- Break above major cost resistance: This formally confirms the technical 'Rule of 123,' signaling the long-suppressed downtrend is reversing. - A gap up on the 60-minute chart: Short-term capital is entering positions—this is the first glimmer of short-term stabilization. - A gap up on the daily chart: If the daily candle jumps above resistance, it shows the bulls are launching a strong, determined counterattack. - MACD histogram turns positive: The momentum indicator nears the zero line and shifts from negative to positive, indicating market control is returning to the bulls. - TSMC (2330-TW) recovers above its quarterly line: TSMC is Taiwan's 'national guardian mountain' and the backbone of the market. Only when it stabilizes above key resistance and returns to its quarterly line can the broader market officially shift into a bullish structure.

Eliminate the Weak, Keep the Strong: Which Stocks Are the 'True Diamonds' Poised to Shine in August?

When market capital starts flowing back, it won't be a 'rising tide lifting all boats.' Only companies with clear industry trends and solid revenue and earnings support will regain favor with investors. Pay special attention to these high-quality stocks with strong moats:

- United Microelectronics (3081-TW): A core supplier in silicon photonics and high-speed optical communications, benefiting from demand for 1.6T and next-generation high-speed optical modules. With high technical barriers, it's a key beneficiary of AI optical communication upgrades. - Nanya Technology (2408-TW): AI is displacing traditional DRAM production capacity, driving memory prices upward. The company is expected to benefit from price improvements and product mix optimization, with high profit elasticity. - Holtek Semiconductor (4979-TW): Focused on high-speed optical transceiver modules and optical communication components, it benefits from AI data center construction. Its products are upgrading to higher-margin offerings, strengthening its operational growth momentum. - Winbond Electronics (2344-TW): A leader in niche memory markets. AI-driven demand for DRAM and Flash has pushed capacity utilization close to full, with order visibility extending into 2027.

Conclusion

From a long-term trend perspective, Taiwan's monthly chart shows no bearish divergence at highs—this is merely a 'midway correction' within an ongoing bull market. As time progresses, the technical picture will enter three consecutive weeks of 'low base effects,' which is highly favorable for bulls.

As long as you avoid leverage and aren't forced out by margin calls, you can laugh all the way to the end of this wealth redistribution cycle. Let's patiently wait for that breakout gap to appear and welcome Taiwan's stock market back to glory in August!

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Source: Moore Investment Advisory – Analyst Jason Jiang

The company has no improper financial interest in the individual securities recommended. Past performance does not guarantee future profits. Investors should make independent judgments, conduct careful evaluations, and assume investment risks on their own.