Super Micro Computer Inc. (SMCI) shares were rocked by news that the Department of Justice has initiated an investigation into the company’s reporting.
The announcement follows a research report released in late August from the short selling firm Hindenburg Research.
In the report, Hindenburg claimed that the company has been manipulating their financial results. The report also pointed out that this isn’t the first time that Supermicro Computer has had issues with regulators.
In 2018, Supermicro Computer was delisted from the Nasdaq Exchange for a short time for failing to meet filing requirements. The company was later fined by the SEC as part of a settlement with regulators.
SMCI stock dropped more than 30% following the Hindenburg report.
Shares did see buyers step in at the $400 level as shares became oversold, but the stock has been unable to gain any traction from buyers.
Today’s move dipped the stock below the psychologically critical $400 price during the day, but shares were above that price as they closed at $402.40.
Options investors were very active trading the October $400 puts today. Heavy volume at that strike speculates that Supermicro Computer is likely to head lower.
From the chart’s perspective, support for Supermicro Computer is likely to come at $350 and then $300.
Today’s move dropped shares of Supermicro Computer below the stock’s 20-month moving average ($443.50), officially dropping the stock into a long-term bear market trend.
Shares of Dell Technologies (DELL) continued their strong weekly performance as the stock closed 5.25% higher for the day.
So far for the week, shares are almost 8% higher following Dell’s inclusion in the S&P 500, effective last Monday.
In addition to Dell’s new spot in the S&P 500, investors appear to also be reacting to Supermicro Computer’s negative headlines as both companies operate in the AI hardware industry.
At $126.40, Dell appears ready to make its ascent back to $150 and then $175. The stock posted its 2024 highs just above $175 in May. Since then, Dell’s management has issued lower earnings guidance twice, causing investors to sell the stock to the tune of half of its value.
Now, after finding a technical bottom at $87 in August, the stock is back in an intermediate-term bullish trend.
Dell’s stock has the benefit of both its 50- and 200-day moving average shifting into bullish trends. Those trendlines combine for technical support at $110 in cast the market endures any more seasonal selling.
Investors will want to maintain a watch on the $125 price over the next week. This price has served as both support and resistance for Dell stock over the last year. A clean rally above $125 will attract more technical buyers.
Shares of Dell remain in a bull market trend with a target of $175.
Stock in Micron Technology (MU) rallied more than 14% following the company’s earnings report.
The report, released last night after the close, bear analyst expectations on both earnings and revenue.
For the quarter, Micron earnings $1.18 per share which was $0.07 better than analyst’s target.
The company’s revenue was also better than targeted at $4.375 billion. That revenue reflects a 97% growth over last year’s revenue for the same quarter.
In addition to the strong earnings performance, Micro’s management increased their forecast for revenue and earnings per share.
Investors bought the stock heavily as Micron shares traded their heaviest volume in more than three years.
The stock’s rally moved shares above their 200-day moving average at the close. This is the first time that Micron has closed above that key trendline since August.
Micron’s shares avoided a shift into a long-term bear market last month as the stock found long-term support at $85.
Maintaining its bullish long-term outlook, shares of MU have a target of $150.
