Taiwan equities turned sharply lower on August 7 after an early rally faded, underscoring how fragile sentiment remains after the market's recent rebound. The TAIEX opened higher on the back of overnight futures and TSMC ADR strength, climbed past 44,800 in early trading, then reversed into the red as selling pressure intensified. Intraday volatility exceeded 880 points before the index finished at 44,225.91, down 170.79 points, or 0.38%, with turnover shrinking to NT$819.204 billion. The close also left the benchmark below its quarterly moving average near 44,278, a level investors are treating as an important technical line. Large technology names were mixed. TSMC, the main support for the broader market, held above flat throughout the session and rose NT$5 to NT$2,370, up 0.21%. MediaTek briefly touched NT$4,010 before reversing to close down 0.51% at NT$3,900, while Hon Hai fell 1.7% to NT$260. Profit-taking was concentrated in previously strong areas, especially passive components, where Yageo dropped 5.26% to NT$540, Holy Stone slid 9.78% to NT$535, and Prosperity Dielectrics fell 7.6% to NT$158. Memory shares also came under pressure: ADATA and Transcend briefly gained about 1% on strong July revenue, but Nanya Technology and Winbond still fell more than 1% and 4%, pointing to persistent doubts over the speed of the sector's recovery. Money rotated instead into more defensive or theme-driven groups. Petrochemical shares rose as higher oil prices linked to geopolitical tensions lifted Formosa Plastics, Nan Ya Plastics, and USI Corporation by more than 1%, while financial stocks also advanced, with the sector index up as much as 0.66% intraday. Traders said elevated foreign investor short positions in futures continued to cap rallies, and that recent gains had left the market vulnerable to profit-taking whenever the index met resistance. The weakness followed a similarly volatile August 6 session, when the TAIEX dropped as much as 587 points to 44,024.32 before bargain-hunting produced a V-shaped rebound. It still closed down 214.90 points at 44,396.70 on turnover of NT$940.4 billion, about $29.2 billion. Broader regional sentiment was also pressured by a mixed U.S. lead and weakness in Japanese and South Korean equities. Analysts say the next test is whether the TAIEX can reclaim and hold the quarterly moving average, with heavyweight stock stability, trading volume and any covering of foreign futures shorts likely to determine whether the rebound can continue.