Don't Be Fooled by Trillion-Dollar Capital Inflows! High-Level Rotation Signals Are Flashing—Retail Investors Beware of Catching the Top!

Trillion-dollar trading volume may seem to be driving the market upward, but behind the scenes, the structure of capital flows has quietly shifted. Valuations in popular sectors are approaching saturation, market breadth is narrowing, and the emergence of catch-up rallies in lagging stocks is a clear signal of institutional high-level rotation. Recognizing this rotation rhythm is essential to navigating risk before the market turns volatile.

Trillion-Yuan Volume Supports the Rally, but Rotation Between High and Low Bases Has Begun

Encouraged by strength in NVIDIA and the Philadelphia Semiconductor Index, along with rising TSMC ADRs, Taiwan's stock market continued its strong performance today. The index briefly broke through its previous high, rising 356 points, with trading value expanding to approximately NT$1.02 trillion. The OTC market also maintained trading value around NT$288 billion, indicating ample market liquidity—an overall positive sign. However, investors should not assume that all stocks will continue rising simply because volume is high and the index is up. Capital is already clearly rotating between high- and low-base sectors. Previously high-flying optical communication stocks are entering consolidation, while previously dormant passive component stocks are now taking the lead—this is a classic sign of capital rotation.

AI Core Leaders' Consolidation Isn't Bad—Fundamentals Will Ultimately Reflect in Stock Prices

Analyst Chen Zhilin has repeatedly emphasized that consolidation in AI core leaders with solid fundamentals is not a negative sign. Instead, investors should watch for whether new buying interest returns after the consolidation. Today, King Yuan Electronics (2449-TW), a bellwether in semiconductor testing, surged over 9% on high volume, further confirming its bottoming pattern. As demand and order shipments for advanced chips gradually recover, fundamental support remains a key focus. Giga-Byte Technology (2368-TW), the leading server PCB manufacturer, surged to limit-up today, decisively breaking through its quarterly resistance line. This proves that after consolidation and chip settlement, as long as fundamentals remain intact, capital will return to truly growth-oriented stocks.

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Catch-Up Rallies Aren't Buy Signals—The Next Opportunity Comes After Volatility and Rotation

The overall market remains in an uptrend with sustained high trading volume—there's no reason to turn bearish here. However, when high-base stocks begin to consolidate and low-base sectors start catching up one by one, it signals the market is entering a phase of valuation correction. Historical patterns clearly show that once most lagging stocks have completed their catch-up rallies, the market often enters another phase of volatility, shakeouts, and position reallocation. Therefore, investors with positions that have already gained significant profits should consider partial profit-taking. The key now isn't chasing higher prices, but waiting for high-base stocks to consolidate and low-base sectors to complete their rotation—then identifying the next batch of core stocks with strong fundamentals, favorable positioning, and attractive risk-reward profiles. We invite investors to download the [Chen Zhilin Analyst APP], where real-time updates are shared instantly. Use data to master market timing, and let our weekly updated margin trading watchlist help you avoid risks and lock in opportunities.

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Source: Chen Zhilin Analyst / Kaixu Investment Consulting

The securities analyzed and recommended by our company have no improper financial interests. Past performance does not guarantee future profits. Investors should make independent judgments, conduct careful evaluations, and assume investment risks on their own.