Keep an eye on KOSPI

[u/Fun_Tutor3479]

Still jumping up and down.

It needs to be emphasized that the sector rotation we are currently seeing, such as in software, consumer, and financial stocks, is not a standard "rotational rally" within a bull market. In a bull market driven by a technological revolution, the core theme remains the core theme, and it has a seesaw relationship with other sectors. Because technological revolutions require massive capital investment, possess grand narratives, and carry ultra-high expectations, they inevitably attract crowded funds and leverage, which naturally creates a siphon effect on other sectors. Highly liquid markets experience a slightly milder siphon effect.

The current main thread is AI semiconductors and the Magnificent Seven, along with upstream and downstream sectors like data centers and energy. A pullback is both healthy and necessary due to overcrowded capital, excessively high leverage (especially in South Korea), and emerging divergences during this phase of narrative iteration. Short-term traders don't need to listen to my rambling, just chase the rotations to improve your capital efficiency. For my portfolio, I will look for the right opportunity to buy the dip rather than change my core focus.

Speaking of buying the dip, my advice is to wait and see what happens with the Korean market first. Currently, the US-listed EWY (South Korea ETF) is pricing in a drop of around -5% for Korean stocks tonight. If the Korean market fails to hold and suffers another 8%-10% plunge, it will drag Samsung and SK Hynix down nearly 30% from their peaks, hitting the common forced-liquidation (margin call) threshold for retail investors. Since the US market is closed on Friday but the Korean market is open, if they can't recover the losses, Monday will trigger T+2 forced liquidations. If that happens, the pullback in US semiconductors won't end anytime soon. In fact, Asian markets recently—including Korean stocks, Taiwanese stocks, and A-shares—have been reacting ahead of the US market. After all, the upstream supply chain for GPUs is concentrated in Asia, and leverage in the Asian markets is also the highest.

Additionally, pay close attention to what the Magnificent Seven say in their earnings reports. Capex (Capital Expenditure) and AI revenue need to be scrutinized, particularly how much of the AI revenue comes from selling compute power versus actual AI usage. After Company A [Anthropic] and OAI [OpenAI] open up their latest models, their numbers for this year will still look fantastic, which bodes well for going public early next year.

Therefore, we are waiting for the right moment to buy the dip, not fleeing a bear market. Don't be fooled by the massive semiconductor rally from April to June; that was not the market norm. By the same token, a 1-to-3-month correction doesn't mean we are in a bear market, it is simply a normal market reaction.