Key Points
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Shares of Super Micro Computer fell again on Tuesday after Hindenburg Research disclosed a short position in the server maker and published a report accusing the company of accounting anomalies, among other things.
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The stock price recently retested the lower trendline of a descending triangle, but failed. Selling pressure developed near the 200-day moving average.
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With Super Micro stock continuing to show weakness, investors should keep an eye on key price levels on the chart at $479, $357, and $260.
Supermicrocomputer (SMCI) fell again on Tuesday after Hindenburg Research disclosed a short position in the server maker and published a report accusing the company of accounting anomalies, among other things. This came after a three-month investigation that included interviews with former top employees.
While our darling in the field of artificial intelligence (AI) Nvidia (NVDA) has rebounded sharply ahead of its quarterly results after a recent correction. Shares of Super Micro are still at their August lows amid concerns that more expensive next-generation AI chips could erode profit margins.
The stock fell 2.6% in regular trading on Tuesday, then fell another 1.5% to $593.30 in after-hours trading. The stock has fallen more than 20% since the beginning of the month.
Below we will take a closer look at the technical characteristics of the Super Micro chart and highlight the key price levels to watch out for.
Failed retest of descending triangle
After reaching an all-time high in early March, shares of Super Micro fluctuated within a descending triangle before breaking below the pattern’s lower trendline last month. Since then, price has made a failed retest attempt, encountering selling pressure around the closely watched 200-day moving average (MA). Additionally, the 50-day MA has recently converged toward the 200-day MA, poised to form an ominous death cross, a chart pattern that often marks the start of a new downtrend.
Given the weak technicals on the server maker’s chart, investors should keep an eye on three key price levels that could play a role if the stock moves lower.
Watch these price levels for further weakness
The first area to watch is around $479, near the August low. Investors will likely be watching to see if buyers can hold this area, which marks a local bottom after the stock’s move lower between mid-July and early August. The chances of a bounce here would increase significantly if the relative strength index (RSI) indicator shows an oversold value below the 30 threshold at the same time.
If this key level is not held, the price could fall to $357. This is an area on the chart where there may be buying interest near a trendline that connects two peaks that formed in August 2023 and January of this year. Both peaks represent previous record highs for the stock.
A further decline could see shares fall to the $260 region, where investors could look for buying opportunities near the June swing high, which capped an impulsive rise between late April and early June 2023. This area also corresponds to a series of similar trading levels from August to December of last year.
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