Single-day net selling is mostly adjustment, not a reversal
Chaoma Bala said on the show "Invest Without Stepping on Landmines" that foreign investors and investment trusts hold massive positions. Even when bullish on a target, they still take profits after gains widen, so single-day or short-term selling does not necessarily mean loss of confidence in individual stocks or the market. Judging trend weakness on short-term net selling alone can easily misread market direction.
He stressed that interpreting institutional moves requires a longer timeframe, observing cumulative net buying and selling over a period, changes in overall shareholding ratios, and which targets funds are concentrated in, to judge whether institutions are truly loosening positions and to further identify suitable price zones.
Simultaneous addition and reduction lists at a glance
Taking the period from June 23 to October 21 as an example, targets with simultaneous buying by foreign investors and investment trusts included Uni-President, Quanta, KGI Financial, E.SUN Financial, Mega Financial, Wistron and Taiwan Cooperative Financial. However, institutional optimism does not guarantee share prices will not pull back first, so it is still better to wait for a pullback to a reasonable range before entering, with relatively lower risk.
Targets simultaneously reduced by foreign investors and investment trusts over the same period included UMC, Yageo, Macronix, Winbond and Innolux. Chaoma Bala noted that net selling does not mean operating problems, with the key being the original holding size. For example, foreign investors hold millions of lots of UMC, so selling tens of thousands of lots in a single period has limited impact on the overall ratio. Acer saw foreign buying versus investment trust selling, but if investment trusts originally held limited shares, the selling pressure impact is likewise limited. The focus is on shareholding ratios rather than just volume.
Three steps to find a reasonable entry level
On judging buying points, Chaoma Bala offered three key points: first, check the weekly chart with foreign investor and investment trust net buying and selling bar charts to confirm the trend starting point; second, use a relatively long-term moving average, such as the 18-month moving average, to gauge the average institutional holding cost; third, if the share price returns near institutional holding cost and institutional holdings show no obvious loosening, it can serve as a basis for evaluating entry. This episode is financial knowledge content produced by Mirror Audio, restating that the content is personal experience sharing with no buy or sell advice on any securities or financial products, and investors should carefully assess their own risks. "Invest Without Stepping on Landmines" is updated every Tuesday and available on the Mirror Audio APP, YouTube and major streaming platforms.