Super Micro Computer
Here we go again. Super Micro Computer (SMCI)’s shares are preparing for a breakthrough $1,100 on their way to our initial target of $1,250.
The stock just experienced a 30% pullback from its recent highs, as traders took profits from a massive 80% rally.
Consider this: That 80% rally occurred over an eight-trading day period.
What’s more, the rally happened after a 30% pullback in shares from their February highs.
This stock is turning into one of the hottest in the AI hardware space as shares are now outpacing the performance of Nvidia (NVDA) by a two-to-one ratio. SMCI is currently posting year-to-date returns of 182% versus 90% for NVDA.
$1,100 should provide s a little resistance for the stock, as it has today.
We should see shares post a close above $1,100 in the next few days, which should target a fear of missing out (FOMO) rally fueled by the company’s upcoming earnings report.
At that point, I see the stock rallying another 18% to $1,250 with a high likelihood that SMCI trades to $1,500 ahead of its earnings report on April 30.
We are likely to see some selling pressure at $1,250, but the crowd has yet to pile into this stock, so upside potential outweighs the risk at this point.
Tesla
Tesla (TSLA) shares are trading more than 5% higher on relatively no news.
The company was reported to have been contacted by Italy regarding the production of electric trucks and vans in the country.
Let’s face it: That’s good for the company, but it’s hardly worth a 5% pop in the stock.
The 5% gain becomes more suspect when you read that analysts from Bernstein lowered their prices target on Tesla to reflect another 30% downside for the stock. The firm turned bearish on the stock in the beginning of March.
The lowering of the price target is the exact action that I warned you about in my latest Tesla deep dive video.
A look at chart for Tesla takes all suspicions away and answers “why” the stock is trading higher.
This morning’s trade took shares above their 20-day moving average.
I call this the “Trader’s Trendline” because it is the trend that most short-term traders use when buying or selling.
In this case, we’re seeing buying as the stock breaks above the trendline, but don’t put much “hope” in Tesla shares moving much higher.
The stock’s 50-day moving average is just overhead at $190 and will act like a six-foot-four-inch 240 pound linebacker to slow the stock’s advance.
From a short-term perspective, that’s your upside. Long term, the stock is still targeted for $100-$150.
Krispy Kreme
If you’ve been trading the markets as long as I have, this may be giving you a little déjà vu.
Shares of Krispy Kreme (DNUT) are acting like their former embodiment – back when they traded with the ticker symbol KKD – as the stock is tearing higher by 24% today.
In the early 2000s, this stock traded more like a technology company as the stores went mainstream.
Today, the announcement that McDonald (MCD)’s would be selling their donuts nationwide by 2025 set fire to the stock, and we’re likely to see this breakout lead to higher values.
Since its second IPO in 2021, the donut dealer’s stock has traded sideways as the distribution channel appeared to be more challenging than its previous life.
Gasoline stations and grocery stores were the main arteries for their product.
McDonald’s announcement obviously increases that side of the business. This potentially strengthens the revenue and earnings growth that have already provided a strong fundamental backdrop for this reemerging company.
The break above $16 will take DNUT shares above their 2023 highs and challenge the stock’s 2021 IPO price of $17. Both psychological levels should help to fuel prices towards a target price of $20.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.