AI also sees the market as a consolidation phase,
given the current market figures and momentum, it is more likely to see sideways movement rather than a downward trend.
In fact, the biggest change is the significant decrease in Samsung Electronics individual futures weak settlement transactions recently.
Usually, a decrease in weak settlement transactions means something negative in the market. However, in cases with high put gamma like this one, it signifies put liquidation to a greater extent.
From a foreign macro perspective, the Korean market is considered to have relatively high potential risks.
The vkospi index is at a high level, indicating a state of fear in the market,
although initial buying occurred, it was not followed by buying momentum, and as a result, the index did not rise. Consequently, short positions are currently more profitable than holding physical assets.
The volatility of the KOSPI is too high, so even a slight adverse event could lead to increased downward pressure, making it difficult for foreign macros to buy easily.
Foreigners are ultimately selling physical assets and profiting from futures. As a result, individuals who initially held inverse positions are experiencing losses in the early stages, while those holding long positions are suffering losses in the latter half.
Ultimately, it can be said that foreigners have taken profitable positions.
Looking at the KOSPI index on Friday, there is a short covering signal to some extent... However, for this to materialize, there would have needed to be a certain degree of upward movement in the US market on Friday.
Nevertheless, futures are still dominated by short positions rather than call options.
The fact that most short positions are concentrated around 1000 on the futures index is one of the reasons why sideways movement is considered possible.
Currently, the US market has many players who have taken short positions on Micron and Nvidia. While most short positions on Nvidia are at a loss, those on Micron are quite profitable.
Yesterday, $898 was the 20-day line, and short sellers and put option holders worked hard to keep it from breaking through. As a result, the stock initially dropped by -4% but eventually closed at -0.4%, indicating buying momentum.
If they continue to push down, there will undoubtedly be a rebound somewhere.
SOX is above the 20-day line, and since SOX has a wide range, short sellers may have thought that it would be possible to short SOXX if only semiconductors were killed. However, due to the rally in broadband communications, semiconductor equipment, and neo-cloud, SOX has settled above the 20-day line.
As a result, broadband communication stocks have surged significantly, and since they have lower valuations than semiconductors, if sentiment improves, there is a high chance that cyclical trading will lead back to semiconductors.
The S&P 500 even reached an all-time high, and the overall market sentiment is relatively good compared to the Korean market. At some point, a large rebound will occur after the selling pressure builds up, leading to short sellers covering their positions... It was possible to push down semiconductor stocks with unreasonable valuations at a large discount, but eventually, the discount narrowed, and as other stocks rose, investors who had been away for a long time turned their attention back to semiconductors in search of prey.
Ultimately, it's a matter of timing... There are opinions that the semiconductor market will rebound after the September FOMC announcement, and others that Nvidia's earnings report at the end of August will be the prelude to this rebound. For now, semiconductors are highly sensitive to adverse events, and the Korean market is too weak. Therefore, it is likely that the KOSPI will continue to experience large fluctuations due to its high level.
As of Monday, Micron's 20-day line is at $891.18, down -1.5% from the previous day.
The SOX / S&P 500 relative strength (index divided) is above the 2-day line, meaning that SOX's growth rate is higher than that of the S&P 500. This indicates that a change in momentum for SOX may occur when Micron breaks above its 20-day line.
Although foreign selling pressure still dominates the Korean market, if one signal light turns on, cracks will appear in the selling pressure, and cyclical trading could begin in earnest. This could lead to a return of the strong momentum seen previously.
Next week's Korean market outlook is not very bright either. Hynix faces headwinds, Korean conglomerates remain lukewarm about shareholder returns, and the government continues to take a passive approach to the market. In fact, by stimulating the market, they are creating larger uncertainties for foreign macro players, leading them to perceive Korea as a "risky market."
The weakening won is a positive factor, and if it falls below 1300, foreign investors may see it as an attractive entry point.
It will be difficult to view the Korean market positively until at least the end of September. For now, we can only hope that cyclical trading will bring warmth back to the entire market.
