Taiex Rebounds 939 Points on Shrinking Volume, Raising Doubts
Led by heavyweight TSMC (2330) rising 25 yuan, the Taiex rebounded 939.35 points on the 28th to close at 47035.58 points, up 2.04%, with trading value of 7232.96 hundred million yuan. Although the three major institutional investors were all net buyers, Cheng-Tung Investment Consulting Vice President Chen Jia-Wei noted that trading volume shrank markedly that day, and with volume as the root of price, described the move as a bear-market rebound after a drop of more than 4,000 points in the Taiex, an escape rally for investors.
Warning of Perfect Storm and M-Top Formation
Chen Jia-Wei described the global stock selloff as a perfect storm, combining features of the 1997 Asian financial crisis, the 2000 dot-com bubble, the 2008 financial crisis, and the 2010 European debt crisis. He said the Taiex often forms an M-top when falling from highs, with the second-peak rebound mostly led by non-electronics stocks, and the atmosphere is similar this time, warning that after a weak rebound the index could break below the neckline, with November trends likely to be even more severe.
AI Earnings Dilemma and Funding Pressure
On fundamentals, Chen Jia-Wei noted that AI tech giants face an earnings dilemma: higher capital expenditure raises market doubts about repayment ability; slower capital expenditure is read as the bursting of the AI bubble. He said market hopes for support from U.S. President Trump (Donald Trump), a TSMC investor conference, and Nvidia GTC had all gone unrealized, and U.S. stocks also performed poorly after earnings releases. He also mentioned that Chinese open-source labs account for 70% of global Token usage, U.S. data center construction has faced public opposition and delays, debt-funded investment has not won market approval, shifting toward equity financing. He added that if the U.S. Federal Reserve (Fed) refrains from raising rates, it would match market expectations for one rate hike each in October and December, meaning a hike in December remains on track.
Downward Quarterly Line and Projection to Annual and 5-Year Lines
On technicals, Chen Jia-Wei said TSMC posted its largest-ever point drop after its July investor conference, with subsequent rebounds failing to make new highs, and its October investor conference also failing to lift the stock, while foreign investors kept selling. The Taiex quarterly-line deduction point is the 3186-point surge on July 31, and the TSMC deduction point is the limit-up price of 2425 yuan; with the deduction levels above current prices, the quarterly line will slope downward as resistance. He recalled that the prior TSMC downward quarterly line due to Trump tariffs fell 32.6%, and the time before that due to the Russia-Ukraine war fell 46.2%. Estimated by 32.6%, the Taiex would see a symmetric annual-line decline; at 46.2%, the Taiex would fall to about 26882 points, the 5-year line level. He said the M-top is complete, the second top has begun collapsing, the rebound of more than 900 points is an exit opportunity, and the bear-market rout has just begun.