Three Stocks: Super Micro Computer, Tesla, and Chubb

Super Micro Computer

What’s this? Super Micro Computer (SMCI) shares traded 15% higher today on little to no news.

Shares of the AI-related stock jumped above their two key technical indicators during Wednesday’s trading on heavy trading volume.  The combination projects a stock price that is likely to advance SMCI shares above their march highs of $1,200.

First, the stock broke above its 50-day moving average. This trendline is one of the most widely watched technical measure on Wall Street as it captures the essence of whether a stock’s trend is its friend or not.

Currently, Super Micro stock’s 50-day moving average is in a neutral trend as the stock has spent the last two months in a slow decline. That decline started when the company failed to pre-announce good news ahead of their most recent earnings.

In addition to breaking above their 50-day moving average, SMCI shares also broke above their top Bollinger Band.

A break above this volatility measure typically triggers a surge in higher prices as the market begins to “chase” a breakout.

The combination of the two technical triggers puts the psychological $1,000 price level within reach. A move back above $1,000 would put SMCI back in the good graces of speculators (like yours truly) that have been waiting for the intermediate-term trend to begin driving prices higher.

My target remains at $1,500 for Super Micro.

smci stock chart

Tesla  

Tesla (TSLA) shares slipped lower by 2% on today’s otherwise strong day for the market.

Tesla’s move comes on the heels of headlines that Elon Musk has hired back “select” members of the recently gutted Supercharger team. While the move may have normally resuscitated the stock, investors may be selling instead based on the run of erratic moves instead.

Today’s selling put the stock at risk of breaking through two key technicals.

Both the 20- and 50-day moving averages for Tesla stock are sitting just 2% below current prices.  Another day like today’s selling would put the stock back below these trendlines for the first time since the first few days after the company’s latest earnings call.

That move would also put the stock back below $175, which has been a pivotal consolidation price dating back to early February.

With Tesla shares already trading in a long-term bearish trend, a move below this critical price would trigger a fresh wave of selling pressure on the stock targeting a move to $150 over the short-term two-to-four-week period.

From there, a break below $150 would draw a line to my intermediate-term target price of $100.

Remain cautious – at best – on Tesla stock moving into June.

tsla stock chart

Chubb

Move over Geico, there’s a new insurance company in Warren Buffett’s pocket.

Insurance company Chubb (CB) shot 7% higher in after hours trading after a recent 13-F filing with the SEC revealed Berkshire Hathaway’s newest large holding.

The filing showed that Buffett’s company has purchased more than 25.9 million shares of Chubb, accounting for an investment of $6.7 billion. The company’s total market cap is $102.7 billion.

Chubb’s insurance lines include property, casualty, accident, health, life as well as reinsurance to individuals, businesses, and multinational corporations.

Investors have been scratching their heads after hints of a new investment were made at Berkshire Hathaway’s annual meeting just over a week ago.

From a technical perspective, CB shares have been in a long-term bull market pattern since late 2020, though a relative strength laggard to other insurance companies like Progressive (PGR). This evening’s news pushed CB shares to new all-time high prices that will likely extend towards $300 over the next six months.

It is notable that insurance companies have been bolstered by high interest rates providing better returns to their portfolios while increasing premiums have increased top line revenues.

cb stock chart

 

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.

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