SMCI’s struggle with $1000

By:
on Mar 25, 2024
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  • SMCI has experienced a remarkable 250% year-to-date surge amid AI craze.
  • SMCI's historic trajectory shows a pattern of breaking trading ranges.
  • Despite short-term bearish signals, bullish sentiment prevails.

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Throughout this year, shares of Super Micro Computer (NASDAQ:SMCI), have been on an exhilarating ride. The company’s trajectory has been nothing short of remarkable, especially amidst the burgeoning interest in artificial intelligence (AI) technologies.

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Riding this wave, SMCI has emerged as one of the standout performers in the market, witnessing an unprecedented surge of nearly 250% in its stock price. Such a substantial increase is noteworthy, particularly for a company of SMCI’s size and stature.

Beginning the year at around $300 per share in January, SMCI’s stock skyrocketed to well above $1,200 by March, catching the attention of investors and analysts alike. However, as the stock reached these lofty heights, it appeared to encounter a significant barrier, with its value stabilizing around the $1,000 mark in recent trading sessions.

Now, the burning question on investors’ minds is: Can SMCI break through this significant barrier? Let’s delve deeper into the analysis.

SMCI’s legacy: Breaking long-term ranges and ascending to new peaks

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Here’s the encouraging news for bullish investors holding SMCI: even if the stock lingers around the $1,000 mark for a while, there’s little cause for concern. That’s because SMCI boasts a storied history of transcending trading ranges, and doing so with remarkable flair. Delving into the long-term chart of SMCI unveils a prolonged period of trading within a wide range of $10 to $40, persisting for almost eight years from 2014 to 2022.

SMCI chart by TradingView

However, in early 2022, the stock finally broke free from this range, embarking on a steady upward trajectory that persisted until April 2023. It was around mid-April of that year that a pivotal moment occurred: SMCI breached the $120 mark.

Some attributed this surge to an initial wave of excitement fueled by the launch of GPT 4, but regardless of the catalyst, the stock surged dramatically after surpassing the $120 minor resistance level, soaring to a staggering $360. The sheer magnitude of this leap is aptly illustrated by the weekly Average True Range (ATR) indicator. Before SMCI transcended its $10-$40 range, its ATR had languished below $4. However, following the breakthrough beyond $40, the ATR steadily climbed, reaching $38 by August 2023. This level persisted for a considerable period as SMCI once again oscillated within a new range, this time between $240 and $340, as delineated in the chart as “trading range 2.”

SMCI chart by TradingView

Can it sustain above $1,000?

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SMCI shattered its second trading range, surpassing the $240 to $340 threshold at the onset of this year, catapulting to unprecedented altitudes with a peak exceeding $1,200 in early March. While it has since undergone a slight cooldown, bullish sentiment continues to dominate all long-term charts.

SMCI chart by TradingView

The stock experienced a substantial correction last week following its inclusion in the S&P 500 and the announcement of a $1.75 billion equity raise at $875. During this downturn, SMCI’s value dipped below $900 but promptly found support precisely at the 61.8% Fibonacci retracement level from its previous peak at $855, a promising indication for bullish investors.

Although short-term indicators now signal bearish momentum, it’s conceivable that SMCI could consolidate within the $850 to $1,200 range for the foreseeable future.

Nonetheless, bears should exercise caution until long-term indicators also turn bearish and the stock descends below the $855 mark. Until such time, the bulls maintain a firm grip on the reins.

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