Taiwan's market just took a sharp one-day hit, but the underlying setup still looks healthy for buyers who can sit through the swings.

• Taiwan's main index dropped hard on September 11 and is now fighting to hold the 46,000 mark.
• The trigger was outside news: the U.S.–Iran conflict pushed oil past $100 a barrel, raising fears of higher inflation and a Fed rate hike.
• The plumbing looks better than the headline — foreign investors have not added to their bets against the market, and borrowed money used to buy stocks has fallen since early July.
• Earnings are still strong, with most tech companies beating expectations, and Taiwan is up nearly 60% this year — second in Asia only to South Korea.
• Three things to watch: whether Washington and Tehran make peace, whether the Fed raises rates this quarter, and whether rising U.S. government bond yields keep pressuring tech valuations.

Outlook: The fourth quarter is Taiwan's traditional strong season, and small and mid-size stocks are expected to lead as the market tries for a new high.