'Fear of 2 PM' Plunge, Supply and Demand Calculations

The recent sharp decline in the domestic stock market at the end of the trading day is analyzed as a pullback from the semiconductor rally amid sluggish performance due to the closure of the US market. On days when the US stock market is closed, there is a tendency to reverse the previous day's gains, and if it fell sharply the day before, it tends to rise the next day. In this market trend, while foreign institutions and institutions showed buying, individual investors showed strong selling, affecting the market decline.

The shift to net buying by financial investment firms signifies an influx of funds into leveraged Exchange Traded Funds (ETFs). As large-cap stocks like Samsung Electronics and SK Hynix showed gains, individual investors concentrated their funds in leveraged ETFs. However, when individual investors over-concentrate in leveraged ETFs, foreign investors tend to offload their holdings in those stocks, which is interpreted as a process of absorbing individual selling pressure during a mid- to long-term uptrend.

The intraday plunge can be seen as a somewhat consistent movement driven by supply and demand factors, without any particular negative news. Although there was a synchronization with the Nasdaq futures index and the Japanese stock market, this is understood to be largely due to the influence of simple supply and demand. No specific negative factors, such as Japan's yen-carry interest rate hike, were confirmed.

If foreign investors carry the leveraged positions of individual investors, the selling pressure increases when the market rises. From the perspective of foreign investors, this creates a situation where they constantly carry a 'bomb' of selling pressure during the ascent, so the process of absorbing individual positions is necessary for a sustained uptrend, according to analysis.

While individual investors seek short-term gains through leverage, foreign investors employ a strategy of offloading positions to achieve a long-term uptrend. When foreign investors create an uptrend, they must absorb the selling pressure from individual investors, which is ultimately a process of absorbing individual positions.

While it would be ideal for both foreign and individual investors to profit together, in reality, individual leveraged positions are a factor that limits upside. Therefore, foreign investors intend to reduce potential selling pressure in the market by absorbing individual positions and creating a more efficient upward trend.

Unlike option expiration, simultaneous expiration of futures and options can cause volatility because futures are a very large-scale product, but it is difficult for the market to deviate significantly from a certain range. Futures have the characteristic that settlement occurs within a certain range, so abrupt movements are limited when a large amount of funds is tied up. Therefore, during the week of simultaneous futures and options expiration, market volatility tends to be more concentrated in the week before expiration, when rollovers occur, rather than during the expiration week itself.

Foreign investors have been steadily accumulating positions beneath the surface since the July low, pursuing a long-term strategy. However, when the market rises, individual investors' profit-taking leads to a flood of selling, making it difficult for the market to rise in tandem with foreign investment. This situation repeats itself.

Foreign investors must use their accumulated positions to drive the market up, but if individual selling continues to emerge, they have no choice but to absorb it. If they don't absorb it, the stock price will fall, so those who have accumulated positions must continue to absorb the volume.

Foreign investors believe that they can create a more efficient upward trend only by strategically shedding individual selling volume. This is interpreted as an intention to absorb individual positions, eliminate market uncertainty, and lay the groundwork for long-term growth.

One important criterion for judging the completion of selling pressure absorption is a drastic decrease in trading volume. An extremely low trading volume suggests that there are no more shares to be sold in the market. Funds with large capital typically absorb selling pressure through price adjustments and then attempt an immediate rebound. In contrast, funds with insufficient capital use strategies to reduce selling pressure by triggering stop-losses or through time adjustments.

Analysis suggests that the excessive concentration of individual funds in leveraged ETFs was another variable contributing to the late-day selling pressure in major stocks such as Samsung Electronics and SK Hynix. Foreign investors appear to feel burdened by the potential for a sudden surge in selling from these leveraged ETFs, where individual investors are heavily concentrated. Therefore, foreign investors are interpreted to have preemptively withdrawn their positions in an attempt to avoid this potential selling pressure.

US Treasury Secretary Yellen's buyback program is an attempt to lower interest rates through a clever exchange of buying and selling short-term and long-term bonds. Secretary Yellen expressed confidence that this strategy could have effects similar to interest rate cuts and quantitative easing on financial markets.

However, Federal Reserve Governor Kevin O'Neill's remarks, mentioning a rate hike stance, dampened the mood. The Fed appears to be maintaining a hawkish stance, contrary to market expectations.

Despite Secretary Yellen's policy confidence, concerns are raised that the Treasury's efforts to lower interest rates could be curtailed by the Fed's public statements. This suggests that the policy discord between the Treasury and the Fed could add uncertainty to the market.

Despite the US 10-year Treasury yield maintaining levels of 4.7-4.8%, the market shows little fluctuation. Expert Min-jun Myung pointed out that the Treasury yield should be lower, around the low 4.7% range or even 6%, and noted that the market's reaction is low compared to investors' fear. This reflects the current market's insensitivity to negative news, which could also indicate the possibility of entering a bull market.

The market has recently shown little decline despite various negative factors such as strong employment figures and surging oil prices. This indicates that negative news is not having much effect, which can be interpreted as a bullish signal demonstrating the market's lack of willingness to fall.

If someone had judged the market to be headed down and bet on a downside, making moves in the derivatives market, a sharp drop should have occurred last week or early this week. However, no such sharp drop materialized.

Furthermore, despite concerns about a stronger yen and the liquidation of yen-carry funds, the cryptocurrency and stock markets have remained robust. These phenomena suggest that the market is not looking for reasons to fall, but rather harbors the potential to rise.

Individual investors need to formulate differentiated response strategies based on their investment weighting and type. For investors holding an appropriate weighting, the basic strategy is to hold on without being swayed by market volatility. If you hold specific stocks like SK Hynix, it is important to adjust your weighting according to your fund management status. Especially for investors using leverage, it is recommended to convert to the main stock upon a market rebound to manage risk.

The semiconductor market is currently analyzed as having the potential for a sustained uptrend. The reliability of the July 8th low remains valid, and the re-ignition of the HBM (High Bandwidth Memory) super cycle and re-verification of memory demand are acting as positive signals.

In particular, NAND flash and general-purpose memory prices (DDR4 and below) are showing an upward trend, raising expectations for overall semiconductor market recovery and growth. Considering these factors, the semiconductor sector is deemed a segment to watch closely in the future.

The impact of exchange rate fluctuations on large corporations has decreased compared to the past. This is because many large corporations use currency hedging strategies and have expanded their overseas production bases, lowering their exchange rate sensitivity. However, small and medium-sized enterprises (SMEs) listed on the KOSDAQ, especially material, component, and equipment (SoBuJang) companies, may face the possibility of deteriorating performance due to the burden of raw material costs. Whether a company can pass on raw material price increases to product prices becomes an important variable determining corporate performance.

The importance of a company's pricing power can be seen through the example of Walmart during Donald Trump's first term as US President. Despite high tariffs of around 45% imposed on Chinese products, Walmart was able to defend its performance by passing this tariff burden on to its subcontractors. This case demonstrates that companies with market dominance and pricing power can maintain their resilience despite external shocks.

There are clear periods when credit or leveraged investing can maximize profits. However, such investments are only suitable for investors who can make quick technical responses even in an instant. Therefore, it is difficult to recommend credit or leveraged investing to general investors. Investors must accurately recognize their capabilities and make prudent decisions.