Shares of Super Micro Computer (SMCI) jumped more than 11% on Friday on relatively weak volume. The day’s move displays the stocks strength at a round-number technical level but shares still have a tough road ahead.
Sumer Micro Computer shares are trading more than 73% lower than their 2024 highs. Shares endured selling pressure during the summer as the company’s operations were showing a fundamental slowdown.
In August, the slowdown turned to worry of potential accounting missteps as the company’s auditing firm resigned and suggested that SMCI’s management had not been forthright in their business reporting.
The stock has now survived those accusation, potential delisting from the Nasdaq Exchange and the delay of its earnings report, all pushing the stock to its recent lows at $17.25 in November.
With little fundamental data available, SMCI shares have been trading almost entirely on their technical price action, a potential problem.
Shares of SMCI have been unable to break above their bearish 50-day moving average. This key trendline has been in its bearish pattern since April 2024.
While shares have been able to post up to two weeks of closes above the trendline, the 50-day has been a fantastic gauge of Super Micro Computer’s directional moves.
The stock has been battling with its declining 50-day – currently at $33.14 – and the psychologically significant round-number price of $30.
With both technical features approaching each other, one will give way to SMCI’s next 20% move.
The company stock is not likely to see a “buy the rumor” rally ahead of its earnings report on February 3 given the uncertainty.
With overhead resistance form the 50-day and a potential break of the $30 price level, investors should view Super Micro Computer as a high-risk candidate with a short-term target of $25.
