Key Takeaways
Super Micro Computer ( SMCI ) shares moved higher in premarket trading on Tuesday after tumbling yesterday following news that the stock will be removed from the Nasdaq 100 Index and reports that the embattled server maker is exploring ways to raise capital .
The stock has had a volatile year, rising to a closing high of $119 in March on the back of artificial intelligence (AI) -driven demand before plummeting in mid-November to around $18 following fears of a potential Nasdaq delisting after accounting anomalies led to delayed financial reporting.
Over the past month, Supermicro shares have recovered 80% after the company hired a new auditor and secured a filing extension until Feb. 25 , but have lost nearly a quarter of their value in the last five trading sessions as investors assess the company’s outlook.
The stock was up 2% at around $34 in recent premarket trading.
Below, we take a closer look at Supermicro’s chart and apply technical analysis to identify important price level worth watching out for.
October Gap Fill
Microcomputer shares initially ran into selling pressure last week after rallying nearly two-fold from last month’s low to fill a late October gap .
More recently, selling has intensified, with the stock’s price staging a decisive close below the 50-day moving average on Monday. The relative strength index (RSI) confirms weakening price momentum, with the indicator flashing a reading below 50 for the first time since late November.
Let’s point out important support and resistance levels that that may attract investors’ interest.
Major Support Levels to Watch
Follow-through selling could see Supermicro shares fall to around $26, a level on the chart where they may encounter support near a countertrend peak during the stock’s early-November sell-off .
A breakdown below this level opens the door for a retest of the $18 level. This location on the chart would likely attract buying interest near last month’s prominent swing low , particularly if other indicators simultaneously signal oversold conditions in the stock.
Crucial Resistance Levels to Monitor
Upon a recovery from current levels, investors should watch how the stock responds to the $39 area, a region where the shares may run into selling pressure near two troughs that formed on the chart during September.
Finally, a more bullish move could see the shares climb to around $50. Investors who bought the recent dip may look to offload shares near a horizontal line that links the early August trough with the upper level of a consolidation period that emerged on the chart throughout most of October within the stock’s broader downtrend .
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