Silicon debug with a trace buffer provides real-time visibility to the design under debug. This method traces a small subset of internal signals during its normal operation. The effectiveness of silicon debug, then, depends critically on the selection of trace signals. This paper proposes a new multiplexer-based trace signal interconnection scheme and a new heuristic for trace signal selection based on implication-based correlation. As a result, we can effectively trace twice as many signals with the same trace buffer width. We also propose a SAT-based greedy heuristic to prune the selected trace signal list further to take into account those multi-node implications. We propose a state restoration algorithm for the multiplexer-based trace signal interconnection scheme. Experimental results for sequential benchmark circuits showed that the proposed approach selects the trace signals effectively, giving a better restoration percentage compared with other techniques.