Yageo's Stock Plunges 40%—Is It Still a Buy? Expert Reveals Second Wave Rally: Wait for 'This Line' Before Re-entering

On the 17th, Taiwan's stock market experienced a historic crash, with the weighted index plunging 2,953.71 points to close at 42,671.27. Meanwhile, Yageo, the leader in passive components, saw its share price plummet again, closing at the daily limit-down price of 699 NT dollars. From its recent high of 1,220 NT dollars, Yageo's stock has now crashed over 40%, leaving many investors who bought at the peak with heavy losses. In response, Pu-Hui Investment analyst Wang Yi-long analyzed in a YouTube video that stocks like Yageo, which have surged multiple times, are unlikely to experience a sharp 'A-shaped' reversal to the bottom. He believes there is still potential for a second wave of upward momentum. The safest confirmation point to buy, he emphasized, is to wait for the stock price to reclaim the 5-day, 10-day, and monthly moving averages.

Amid the broader market selloff, heavyweight stocks such as TSMC and Hon Hai also declined sharply. Yageo was recently targeted by media reports suggesting that major shareholders had sold shares after releasing pledged collateral at high prices, causing the stock to reverse sharply from over 1,220 NT dollars down to around 699 NT dollars—a near 50% drop. Yageo has since clarified that the rumors about major shareholders selling shares are unfounded. However, investor skepticism remains.

Can Yageo's stock recover after the market crash and rumors of insider selling?

Regarding this, analyst Wang Yi-long explained that when Yageo began its decline, it simultaneously broke below both the 5-day and 10-day moving averages, triggering signals for profit-taking and reduction. Subsequently, a long black candlestick broke below the monthly moving average, forming a technical bearish pattern that led to collective stop-loss and profit-taking selling pressure. Currently, Yageo remains in a short-term bearish pattern, with the stock price unable to rise above the 5-day moving average during the downtrend, reflecting a weak structure where prices are moving downward along the 5-day line.

Wang Yi-long believes that stocks like Yageo, which have experienced massive multi-fold gains, are unlikely to undergo a direct 'A-shaped reversal' to the bottom. Instead, there remains a chance for a second wave of upward momentum. He stressed that whether the quarterly moving average is holding is currently unimportant, as 'in a downtrend, resistance matters more than support.' Investors must clearly identify the trend and master the rhythm. At this stage, the most critical task is to see the price break above the 5-day and 10-day moving averages.

Wang explained that for those aiming to catch a short-term rebound, the minimum requirement is to see the stock price reclaim both the 5-day and 10-day moving averages. Only when short-term moving averages are reclaimed can the decline first be halted. A safer confirmation point is to wait for the stock to reclaim all three short-term moving averages—the 5-day, 10-day, and monthly lines. Until then, he advises against blindly buying the dip and recommends waiting for the trend to turn strong again before re-entering. If this rally is viewed as the first wave of a long-term uptrend, the '20-week moving average' becomes the key indicator for determining whether the long-term trend has turned bearish. As long as the 20-week moving average holds, the long-term uptrend remains intact. However, once it breaks below this line, it signals a long-term bearish reversal, and investors should be extremely cautious.