KOSDAQ Reclaims 60-Day MA; Chip Stocks Poised for Shift

The KOSDAQ index closed with a 0.76% gain, successfully reclaiming its 60-day moving average. This recovery marks a significant bullish signal, as the market displayed seven consecutive days of positive candlesticks.

This resilience is particularly notable given the heavy weighting of the underperforming biotechnology sector within the index, indicating underlying strength across other market segments.

The market's overall bullish sentiment supported this strategy.

Despite afternoon fluctuations, the underlying trend remained positive, encouraging higher market participation.

Concerns regarding the Bank of Japan's (BOJ) policy changes were largely dismissed. The anticipated 25 basis point rate hike is already factored into market expectations.

Analysts argue that any short-term market fluctuations stemming from yen carry trade unwinding should not provoke panic among investors, as the move is widely telegraphed.

Recent discussions about an 'AI speed control' narrative, particularly from companies like Anthropic and OpenAI, were dismissed as a strategic move. This narrative is seen as an attempt by leading AI firms to establish regulatory barriers, preventing new competitors from entering the market.

The technological competition between the US and China, however, renders such domestic regulation efforts largely ineffective.

These statements coincide with their preparations for initial public offerings.

Such narratives are interpreted as attempts to build 'moats' around their businesses, protecting them from future competition and enhancing their valuation ahead of public listing.

This strategic communication aims to position these companies as stable and profitable entities, despite the nascent and rapidly evolving nature of the AI industry.

By framing the regulatory discussion as a need for 'speed control,' these firms seek to solidify their dominant market positions.

Investors continue to view the semiconductor industry through traditional cyclical patterns, expecting oversupply to lead to price erosion.

This fear, that expanding production volume (Q) will inevitably lead to a sharp decline in pricing (P), prevents significant stock price appreciation, keeping valuations stagnant.

Contrary to historical patterns, there is an expectation that current supply expansion in the semiconductor industry will not lead to significant price drops. This outlook suggests a fundamental shift in market dynamics, where increased production can be absorbed without collapsing prices.

The belief is that semiconductor prices will maintain stability for an extended period, moving away from the sharp cyclical downturns of the past.

This stability is projected to drive significant profit growth for major players like Samsung Electronics and SK Hynix over the next two years, challenging the traditional 'P-era' mindset.

The market is anticipated to fully recognize this new era of sustained demand by the first half of next year. Stock prices are expected to reflect this fundamental shift approximately three to six months in advance.

This pre-emption suggests that the recovery and upward trend for semiconductor stocks could begin as early as late this year or in the first quarter of next year, preceding widespread market awareness. Investors are advised to maintain their positions, enduring potential volatility until the end of the year, to capture the eventual upside.

These companies are poised to benefit disproportionately from increased capital expenditure in the semiconductor industry.

Equipment and material stocks typically exhibit higher price elasticity during periods of industry transition and expansion, offering greater potential for capital appreciation than the larger, more established chipmakers.

Examples cited include Wonik IPS and Eugene Tech, which are showing early signs of technical breakthroughs and market leadership within the supply chain. These firms are critical beneficiaries as major chip manufacturers increase investment in new production capabilities.

The logic is that as Samsung and Hynix ramp up production, they must invest heavily in infrastructure, directly benefiting the companies that supply the necessary equipment and materials.

The aerospace sector has been under observation for several weeks as a potential growth area. Key leaders like HVM and SeAH Besteel Holdings were identified for their strong upward momentum and favorable reports.

Buy signals were executed when these stocks decisively crossed above their 60-day moving average, indicating a bullish trend. SeAH Besteel Holdings, in particular, served as an indicator for broader sector interest after it broke its 60-day line and received positive analyst reports.

This approach also involves disciplined risk management, setting clear stop-loss points if a stock breaks down below its 60-day moving average, thus preserving capital.

Monitoring other aerospace companies like Innospace and Nara Space, the strategy is to consider them for investment once they also surpass their 60-day moving averages.

Re-entry into these major semiconductor stocks will be considered only if specific technical and fundamental conditions are met.

Investors should look for a strong, sustained breakout and support above the 60-day moving average. This technical indicator would signal a robust reversal in trend.

Furthermore, a significant increase in foreign buying activity would serve as an additional confirmation for increasing exposure, suggesting renewed institutional confidence. Even with a potential rise in these major players, the speaker believes that supply chain and equipment stocks may still offer superior performance.

No stock can experience a significant surge without first breaching this critical technical level.

The 60-day moving average also serves as a crucial tool for managing risk, helping investors avoid substantial losses during market downturns. An exit strategy dictates selling if the price falls below this line, thereby cutting losses and preserving capital.

This recommendation was made as the Kospi index began to break below its 60-day moving average, following a more than 20% decline in Samsung and Hynix from their recent highs.

Despite the initial negative reception, the market subsequently experienced a significant downturn, validating the strategy. This event underscored the importance of adhering to technical indicators, particularly the 60-day moving average, as a reliable trigger for market actions.

This strategy emphasizes daily responsiveness to market conditions rather than relying on long-term predictions.

Investors are encouraged to diligently study daily market movements and adjust their holdings accordingly, recognizing the dynamic nature of the current environment.

Market analysis should primarily serve to inform personal risk management strategies, rather than merely providing stock information. Crucially, investors must define clear entry and exit points for their trades, which is often a missing piece in general analyst commentary.

Many analysts, despite their expertise in industry and stock analysis, frequently offer vague advice such as "sell during corrections" or "take profits when it rises" without specifying concrete price levels.

This vagueness highlights the need for individual investors to develop their own precise trading rules. The analyst admitted to not possessing deep technical knowledge in specific hardware manufacturing processes, emphasizing a focus on actionable market signals rather than fundamental technicalities.

The existence of 'manipulation stocks' or organized market manipulation efforts in the current market environment was denied. With strict regulations and severe penalties, engaging in such activities is considered too risky for any groups to attempt.

When a stock breaks below this line, the principled response is to sell, even if it might seem counter-intuitive in the short term.

This discipline is paramount for managing risk and protecting capital from potentially larger downturns. The strategy allows for re-entry once the stock re-establishes a position above the 60-day moving average, confirming a renewed upward trend.

An example of applying this principle was given for managing positions in biotech stocks like Alteogen, where adhering to the 60-day rule guided selling decisions.

The trading strategy relies strictly on visual market patterns and current signals, not on predictive forecasting of future supply and demand. Attempting to predict future market movements, even with a high success rate, carries catastrophic risk if a single prediction proves wrong.

The focus remains on reactive scenarios, where actions are taken in response to established market signals, rather than proactive speculation based on uncertain future events.

This approach prioritizes minimizing the impact of incorrect predictions over the allure of high-accuracy forecasts, emphasizing the potential for ruin from even a single wrong bet.

This action aligns with the strict adherence to the 60-day moving average as a critical exit signal.

Re-entry into these stocks will only be considered if they demonstrate a strong, sustained breakout above the 60-day resistance line, indicating a clear reversal of their downward trend.

In contrast to other stocks that have broken down, NHN has shown a different pattern, demonstrating an upward momentum. It is currently holding above its 60-day moving average, serving as a critical support level.

This resilience makes NHN a potential candidate for a trading entry, as it aligns with the strategy of buying stocks that maintain strong technical support.

The speaker explicitly rejects traditional predictive chart patterns, such as the 'ascending three methods,' viewing them as purely retrospective analyses. These patterns attempt to forecast future movements based on past price action, which is seen as unreliable.

Charts are likened to traffic signals, providing real-time information for immediate action rather than tools for predicting distant outcomes. This philosophy advocates for treating each trading session as an independent event, reacting to current signals without the burden of past performance.

Consequently, the strategy advises against making trading decisions based on consecutive losses or gains, arguing that each market moment demands a fresh assessment based on current indicators.

Focusing on immediate signals over predictive patterns fosters a disciplined, reactive approach to the market, avoiding the pitfalls of speculative forecasting.

It has seen swings from 2,500 to 9,300 followed by a significant 40% correction, presenting unique challenges and opportunities.

This period of consolidation is emphasized as an invaluable time for investors to study market dynamics and refine their strategies. Understanding these extreme movements is crucial for long-term success.

The advice for this period is to prioritize asset preservation while simultaneously looking for opportunities to maximize profits, urging against panic-driven decisions in short-term fluctuations.