10-Point Checklist for the Bottom of Semiconductor

10-Point Checklist for the Bottom of Semiconductor Deleveraging (Concise & Practical Version)

I. Leverage & Capital Flow Signals (4 points)

1. Triple-Leverage ETFs (e.g., SOXL): High-volume single-day decline but no new lows, consecutive 2-3 days of narrowing sequential redemption scale, no more passive selling at the close.

2. Margin Trading / Financing Positions: Overall sector margin balance stops declining continuously, single-day net repayment amount shrinks significantly, no announcements of concentrated forced liquidations.

3. CTA Momentum Funds: Semiconductor trend long positions drop to near 3-month lows, short position increase momentum exhausts.

4. Foreign Capital: Consecutive large outflows from leading Korean and US memory stocks end, with periodic small-scale inflows appearing.

II. Options Sentiment Signals (2 points)

5. Call Option Crowdedness: Proportion of out-of-the-money call option volume continues to fall, call/put option ratio declines significantly from extreme highs.

6. Market Maker Hedging Pressure: Implied Volatility (IV) no longer surges one-sidedly, panic premium in options narrows on big down days, no concentrated hedging selling pressure.

III. Stock Price & Underlying Structure Signals (2 points)

7. High-Beta Stocks Stop Falling: High-beta memory stocks like Micron, SK Hynix, Samsung lead in stabilizing first, with declines smaller than the overall sector, no longer leading the decline.

8. Leaders Show Resilience: Core computing/memory leaders in the industry consolidate and close higher, small-cap stocks remain weak, capital begins crowding into core assets.

IV. Fundamental & Sentiment Catalyst Signals (2 points)

9. Good News No Longer Triggers Selling: After companies report better-than-expected earnings or industry supply-demand positive news, stock prices no longer exhibit "sell the news" behavior.

10. Bad News Becomes Muted: After short-term negative industry news (demand downgrades, capacity expansion rumors) is released, the sector opens low and closes high or shows minor fluctuations, no longer triggering deep plunges.

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Emotional phase over 🔚

Mistake was playing with leverage 😂

The rest of the review seems okay haha

Enough emotions, time for some rational and normal stuff!

III. The Complete Evolution Path of This Semiconductor Bull Market

Real industry bottlenecks → Earnings realization → Valuation increase → Market narrative diffusion → Individual stock long-term optionalization → Market-wide leverage addition → Positive news fails to push prices higher, market peaks → Compressed deleveraging.

1. Long-term optionalization: The market no longer only looks at 12-month earnings, directly pricing the industry's potential over the next 3-5 years. HBM and memory are given long-term scarcity premiums, leading to valuation bubbles in high-beta memory stocks.

2. Leverage crowding amplifies volatility: Capital places multi-layered bets through individual stocks, long-term options, 3x leveraged ETFs (SOXL), margin trading, and CTA trend-following programs. Synchronized buying during rallies and selling during declines create one-sided liquidity stampedes. US option trading volume surged significantly in June 2026, with leveraged trading becoming the main driver of market moves.

3. Attention bull market risk: The entire market is highly unified in its bullish view. All negative information is interpreted as long-term positive news (non-falsifiable narrative risk). The market lacks counter-trend buying, appearing liquid but actually extremely fragile.

IV. Seven Stages of the Market Cycle (T0-T6)

1. T0: Healthy rise driven by fundamentals; T1: The sector becomes the mainstream market narrative; T2: Revaluation of individual stocks' long-term value; T3: Narrative fully saturated, unanimous bullishness; T4: Reflexive top, positive news no longer lifts prices; T5: Forced deleveraging (current stage), collective selling of leveraged, options, and high-volatility positions; T6: Risk cleared, ready for repositioning.

V. Pain Points of Traditional Investment Frameworks Failing

Traditional research relies on monthly/quarterly industry data, but this round of deleveraging involves intraday, multi-day volatility. Simple fixed-percentage stop-losses are easily washed out. Judging the bottom based solely on price decline is impossible; monitoring trading structure indicators is essential.

VI. Ten Structural Signals to Judge the End of Deleveraging

Cannot just watch price declines; must simultaneously observe: Leveraged ETFs see high volume without new lows; High-beta memory stocks stop falling; Positive news no longer triggers sell-offs; Call option crowding recedes; Put/call ratio rises; Negative news no longer causes sharp drops; Leaders stabilize first; Long-term industry demand does not deteriorate. The article judges the current stage as T5 forced deleveraging, nearing its end but with aftershocks remaining.

VII. Practical Investment Implications

1. Distinguish two types of declines: Exit if fundamentals deteriorate; Adjustments due only to trading crowding and leverage unwinding are short-term. The long-term AI theme is not over.

2. Risk control upgrade: Cannot just study company fundamentals; must also track options, leveraged ETFs, and market narrative crowding. Reduce long-term, high-volatility positions and cut leverage ahead of market tops.

3. Long-term discipline: The long-term logic of the AI industry remains unchanged, but long-term option premiums will contract cyclically. Do not maintain full positions with high leverage and high long-term volatility exposure. Reposition into core beneficiary leaders after deleveraging is complete.