Scott’s take on Super Micro Computer $SMCI – April 16, 2024
This is Scott with StockMarketMentor.com and your Chart of the Day. I want to take a look at Super Micro Computer ( NASDAQ: SMCI ).
SMCI ( NASDAQ: SMCI ) is showing a lot of relative strength here, versus the rest of the market. If you look at the triple Q’s ( NASDAQ: QQQ ), it’s down under that 50-day moving average. But if you look at the semiconductor index ( NASDAQ: SMH ) it’s actually holding near its 50-day moving average and hasn’t closed below.
So there is some definite strength bubbling under this market volatility right now in the semiconductor space, and SMCI ( NASDAQ: SMCI ) is just one of those stocks with some outperformance today. If I zoom in we can see, SMCI ( NASDAQ: SMCI ) is in a nice consolidation pattern, above all the major moving averages.
We have a clear downward-slopping trendline, right there, right there, right there. And then we have a clear little base of support right there. We actually made a low here on SMCI ( NASDAQ: SMCI ) near the end of March. But then, we made a higher low here in the first couple of days in April. And so market participants were actually forced to reach higher, even on this market weakness.
We had a low and a higher low, and now we have an upside follow-through with a daily higher high on the chart. Now, if market conditions were better I’d say, this looks buyable today. In fact, it probably is buyable today. But because of the market volatility, you probably want to manage your size in this environment.
What I want to see from SMCI ( NASDAQ: SMCI ) is follow-through. I want to see this make another higher high, and maybe test some of these recent highs, like up here at around $1,050.00. Now, keep in mind that SMCI ( NASDAQ: SMCI ) does have earnings coming up at the end of April, April 30th.
So if you take this idea, as a trade, at your own risk, just keep in mind earnings are coming up. And if you don’t have a cushion in a position leading into earnings, it can lead to disaster. So make sure you build enough of a cushion to hold into earnings. And if you don’t, then I usually sell before earnings and then just say, well, if it pops up I’ll buy it back tomorrow.
You’ve been able to do this here with SMCI ( NASDAQ: SMCI ), where it has positive earnings. It gaps up the next day, sells off, and actually offers you another entry. And so, I recommend, that if you don’t have a cushion with any position, sell it, wait until the next day, and just look for a new entry.
That’s what I would think here on SMCI ( NASDAQ: SMCI ). I think you could probably swing this to try and touch some of these recent highs, like up here at 1,050.00, maybe 1,100.00, or something like that for a short-term trade.
At that point, maybe you get a little bit of a pullback and a retest of this move. And then you are off to the races again, if it offers a new entry. Now, I definitely think we are in a swing trading market right now just because of the market volatility.
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