Key Takeaways
Super Micro Computer shares fell again Tuesday after Hindenburg Research disclosed a short position in the server maker and published a report that accuses the company of accounting anomalies, among other issues.
The share price recently made a failed retest of a descending triangle's lower trendline, finding selling pressure near the 200-day moving average.
Amid further weakness in Super Micro shares, investors should monitor key price levels on the chart at $479, $357, and $260.
Super Micro Computer (SMCI) shares fell again Tuesday after Hindenburg Research disclosed a short position in the server maker and published a report that accuses the company of accounting anomalies, among other issues, following a three-month investigation that included interviews with former senior employees.
While fellow artificial intelligence (AI) darling Nvidia (NVDA) has rebounded sharply leading into its quarterly earnings report after a recent correction, Super Micro shares still languish towards their August low amid concerns that more expensive next-generation AI chips could eat into profit margins.
The stock fell 2.6% during regular trading Tuesday, and then fell another 1.5% to $593.30 in after-hours trading. The stock has declined more than 20% since the start of the month.
Below, we take a closer look at the technicals on Super Micro’s chart and point out important price levels to watch out for.
Failed Retest of Descending Triangle
After setting a record high in early March, Super Micro shares oscillated within a descending triangle before breaking down below the pattern’s lower trendline last month. Since then, the price has made a failed retest attempt, finding selling pressure around the closely watched 200-day moving average (MA). Moreover, the 50-day MA has recently converged toward the 200-day MA, sitting poised to form an ominous death cross, a chart pattern that often marks the start of a new downtrend.
Amid weak technicals on the sever maker’s chart, investors should monitor three key price levels that may come into play if the stock moves lower.
Monitor These Price Levels Amid Further Weakness
The first area to monitor sits around $479 near the August low. Investors will likely be watching if buyers can defend this area, which marks a local bottom following the stock’s mover lower between mid-July and early August. The chances of a bounce here would increase significantly if the relative strength index (RSI) indicator flashes an oversold reading below the 30 threshold at the same time.
A failure to hold this important level opens the door for a slide down to $357, an area on the chart that may find buying interest near a trendline joining two peaks that formed in August 2023 and January this year, both of which represent prior record highs in the stock.
Further downside could see the shares fall to the $260 region, where investors may be on the lookout for buying opportunities near the June swing high that capped an impulsive move higher between late April and early June 2023. This area also aligns with a range of similar trading levels from August to December last year.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author does not own any of the above securities.
Read the original article on Investopedia.