#夏日创作营

Korean stocks have been falling nonstop—only one step away from a technical bear market. Can SK Hynix still be bought?

After Gate launched trading for US and Korean stocks, stock trading has gotten hot. Many people have taken part in speculation on stocks like Micron, SanDisk, and Nvidia. And the one everyone has been trading the most recently is SK Hynix (according to observations by “Xiao Caishen” across major livestream rooms). That’s because the KOSPI index has been swinging a lot recently, and the profit space for going long or short SK Hynix can be imagined to be huge. Today, Xiao Caishen will talk with you about how to operate SK Hynix going forward—can you still go long?

## I. Analysis of the Korean stock market: the index keeps falling—watch the 6,000-point bull-bear line

When it comes to the biggest “troublemaker” in the financial markets recently, it has to be Korean stocks. Circuit breakers have become a routine thing—stocks bounce back and forth between limit-up and limit-down every day. But unlike the US market, where things are choppy, the overall trend in Korean stocks has been steadily downward. On July 13, the index plunged nearly 9% in a single day, falling below the 7,000-point whole-number level and triggering the 7th market-wide circuit breaker of the year. On July 20, the index opened lower again and kept sliding; intraday losses widened to 5%, closing at 6,478.66 points. Although the market saw a rebound today, with the index jumping 4.88% intraday and triggering the “sidecar” mechanism, the close on the day was 6,747.95 points—an accumulated pullback of about 28.1% from the yearly high. Together, Samsung Electronics and SK Hynix account for 52%-54% of the weighting in Korean stocks, so it can be said that weakness in the Korean stock market also means weakness in SK Hynix.

So what about the outlook for the Korean stock market going forward? As mentioned earlier, the bigger picture for the Korean stock market is still in decline. Two developments are worth paying attention to:

1. A large number of retail investors participate in the market through 2x leveraged ETFs. During the selloff, forced liquidation orders keep pouring in. As of July 13, more than 1.2 million leveraged accounts had already received margin call notices, with 320,000-360,000 accounts being fully liquidated, further amplifying the downside.

2. The geopolitical conflict between the US and Iran has pushed up oil prices. Combined with the Bank of Korea’s rate hikes and weaker export data, foreign capital has continued to flow out heavily. In the second quarter, Korea’s market recorded cumulative net foreign outflows of about $97 billion, worsening liquidity pressure in the market.

Until leverage funds are fully cleared and the situation of capital outflow reverses, the downtrend is difficult to reverse. Going forward, one point needs special focus—the gain/loss around the 6,000-point whole-number level. This is not only a psychological line for bulls, but also an important support from the weekly MA30. Once it breaks, it can be confirmed that the market has officially entered a bear market. If the market can stabilize at this level, there is still a possibility for further reversal and continuation of the bull trend.

## II. Analysis of the US stock market: the Nasdaq keeps churning—be alert to capital fleeing

The Nasdaq has been drawing a line horizontally lately. In mid-July, the index continued its adjustment. On July 16, it closed at 26,269.23 points, up 0.6%. On July 17, it fell 1.5% to 25,881.95 points. On July 21, it went further down to 25,508.07 points, hitting a new low in three weeks. However, on that day, the semiconductor sector rebounded against the trend: the Philadelphia Semiconductor Index rose 0.6%, and multiple core names closed higher.

Momentum and volatility: in the earlier period, a large number of hedging funds had cut long positions in momentum stocks related to semiconductors and AI by about 5% of total market value, one of the largest declines on record. The sector’s speculative positioning has basically completed its unwind. The Philadelphia Semiconductor Index had previously even slipped into a technical bear market; now, after actual volatility expanded quickly, it has started to stabilize, and short-term oversold rebound momentum is building up.

Key setup: the Nasdaq 100 Index is moving closer to the neckline support area of a mid-term “double top” pattern at about 28,200 points. If that level is lost, it will trigger more stop-loss selling by long positions.

Capital signals: as of July 21 data, the proportion of long positions in the Nasdaq 100 saw a small pullback, and overall market sentiment is dominated by a wait-and-see stance. Trading volume is down by about 20% compared with the 30-day average, indicating a low-volume consolidation/adjustment state.

Considering the long-term bull market characteristics of US stocks, it’s unlikely the Nasdaq will break down into a sharp selloff after trading sideways continuously. But capital has clearly already been escaping from the AI sector. Although Hynix’s performance after listing in the US is relatively strong, it can still be dragged down by the sector as a whole. Be careful about the risk of subsequent declines following the AI sector due to capital fleeing.

So, combining the above analysis of the US and Korean markets, the decline in this semiconductor-sector cycle is far from over. In the short term, any rebound is a good opportunity to trim and exit long positions. Going forward, you need to closely watch whether the KOSPI Index holds or loses the 6,000 integer level. If it breaks, it would mean the market has fully entered a bear market. Then you can short SK Hynix on strength. If you’re asking where the short target should be, Xiao Caishen can only say: use the magnitude of gold’s downside as a reference—open up your mindset a bit!