Taiwan stocks surged in buying after nearly 2,700 points dropped in a single day, with institutional investors pointing out "three indicators, two variables" to determine the signal to stop falling

Taiwan stocks briefly plummeted nearly 2,700 points in the early trading session on the 8th, with institutional analysis attributing the decline to a "profit-taking sell-off" after a strong rally, rather than a fundamental change in AI. They highlighted "three indicators and two variables" as key points for future market observation.
(Background: Taiwan stocks broke through 36,000 points, TSMC hit a record high of 2,040 NT dollars! Trump-US-Iran call sparks fire)
(Additional context: Taiwan Futures Index night session plunged 3,006 points—the worst in history: a 2,000-point drop in two minutes, and on Monday, "Four loans together" waiting to be liquidated)

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• TSMC’s monthly support line becomes a key bullish indicator
• Margin maintenance ratio and divergence rate still need further correction
• Market capital rotation begins
• Two major international variables: CPI and FOMC

Affected by external factors such as last Friday’s better-than-expected US non-farm payroll data and the sharp decline of the Philadelphia Semiconductor Index, Taiwan stocks experienced a nearly 2,700-point plunge in the early session today (8th). The weighted index dropped straight from around 42,000 points to the 39,300 level, triggering high alert for short-term leverage liquidation risks. Institutional analysis indicates that this rapid decline should be viewed as a collective sell-off after a bullish rally, rather than a fundamental shift in AI. The medium- to long-term bullish structure remains supported after short-term deleveraging. The market’s decline near midday has narrowed by over 1,000 points, showing that buying on dips has begun.

TSMC’s monthly support line becomes a key bullish indicator

The first indicator highlighted by institutions focuses on the support of Taiwan’s flagship TSMC on its monthly chart. Last Friday, TSMC’s ADR fell 6.69%, returning to the vicinity of its monthly support line. Corresponding to the spot price of Taiwan stocks, the monthly line is around NT$2,293. During today’s trading, TSMC briefly dipped to NT$2,230 before rising again to NT$2,320, indicating that this range has attracted buying interest. If we consider last Friday’s closing price of NT$2,365, a 6% retracement is about NT$2,220. This low point will be a critical defensive level for the bulls and the primary indicator for whether the market can stabilize.

Margin maintenance ratio and divergence rate still need further correction

Next, the margin maintenance ratio is another key focus for the market. Currently, Taiwan’s margin balance stands at NT$566.6 billion, with a margin maintenance ratio of approximately 198.98%. While still above safe levels, analysts warn to closely monitor whether today’s closing data drops to 140%, or even approaches the 130% margin call liquidation threshold. Based on today’s intraday decline and convergence, the margin float remains unwashed; additionally, the 60-day (seasonal) divergence rate of the index is 17.63%, still higher than the long-term average of 12.1%, indicating room for technical correction.

Market capital rotation begins

The third indicator focuses on sector rotation within the market. Mainstream tech groups such as passive components, ABF substrates, PCBs, optical communications, and memory have surged over 200% this year. After a sharp sell-off, it’s worth observing whether low-cost buying interest emerges. Meanwhile, sectors like finance, domestic demand, food, telecommunications, and utilities, which have low bases and defensive advantages, may see capital flow from electronics to these defensive stocks. This will be a key sign of whether a structural shift is occurring in the market.

Two major international variables: CPI and FOMC

In addition to internal chip market corrections, international macroeconomic events are crucial for future direction. First, the US will release May CPI data on June 10, which is the last inflation hurdle before the Federal Reserve’s decision meeting. Then, the FOMC rate decision will be held on June 18. The global market is awaiting the new Fed Chair Powell’s policy stance, as his comments on the labor market and inflation will directly influence capital flows in the second half of the year.

Institutional advice suggests that, before short-term market volatility subsides and margin positions are fully cleaned up, investors should avoid blindly chasing highs. Instead, they should stagger their positions, wait for the TSMC monthly support to be confirmed, and closely monitor the two major international variables in mid-June before entering high-quality stocks with solid medium- to long-term fundamentals.