Taiwan stocks surged in the midday session before being knocked back by selling pressure, turning negative in the closing minutes — bad news for short-term bulls.

• The index opened higher and at one point rose more than 300 points to reach 46,350, but selling pressure emerged at the highs, and it ultimately fell 210 points, dropping below 46,000.
• Heavyweight stocks weighed most heavily, with TSMC, MediaTek, and Hon Hai all closing lower, while Delta Electronics was flat.
• The memory sector was mixed, with Winbond surging more than 5%, but Phison and Nanya Technology turning negative.
• Support from U.S. equities was limited: U.S. producer prices for July showed cooling inflation, and the market expects the Federal Reserve to hold rates steady in September, with the S&P 500 having just set a closing record the previous day.
• E.Sun Financial took a fairly neutral view, arguing that Taiwan's central bank has grounds to raise rates but is in no hurry, with the best timing likely falling in the first quarter of next year.

Outlook: In the near term, volatility around 46,000 is intensifying, with direction hinging on foreign investors' net buying and selling and the Fed's September move.