Super Micro Computer's shares witnessed a significant jump in premarket trading on Tuesday. The beleaguered server maker announced the appointment of a new auditor and submitted a compliance plan to Nasdaq to meet its listing requirements. This development has sparked interest among investors and led to a potential shift in the stock's trajectory. Uncover Super Micro's Market Moves and Key Levels
RSI Indicator Moves Out of Oversold Territory
In early March, Supermicro shares were trading within a descending broadening formation. However, towards the end of last month, they broke down below this pattern. The declines accelerated into early November, but last week, the stock found buying interest just below the closely watched 200-week moving average. Although the relative strength index (RSI) currently shows bearish price momentum with a reading hovering just above 30, it has moved out of oversold territory this week and is poised to continue rising following Tuesday's jump. This indicates a potential change in the stock's momentum and could lead to further upward movement.The RSI's movement out of oversold territory suggests that the market sentiment towards Super Micro Computer may be shifting. Investors are now closely watching how the stock will respond to this change and whether it will continue to gain momentum or face further challenges.
Key Overhead Levels to Monitor
After Tuesday's news-driven pop, investors are closely monitoring how the stock reacts to the $30 level. This level is significant as it represents a confluence of resistance from the top trendline of a narrow consolidation range that formed on the chart from May to October last year and the descending broadening formation's lower trendline. If the stock can break through this level, it may indicate a stronger upward trend.Further buying could potentially fuel a rally up to the $39 region. This area on the chart is where investors who purchased the stock at lower levels may look to exit near the September trough that preceded the steep October sell-off. It will be interesting to see if the stock can sustain this upward momentum and reach this level.A more bullish move could see the shares revisit overhead resistance around $64. This location may encounter selling pressure near the 50-week moving average and the descending broadening formation's upper trendline. If the stock can overcome this resistance, it could signal a significant upward shift in its price.
Major Support Area to Watch
During retracements, investors are keeping a close eye on whether buyers can defend the $23 level. This chart area could provide important support near the 200-week moving average and the lower trendline of the narrow consolidation range mentioned earlier. If the stock manages to hold above this level, it may indicate that the downward trend is starting to stabilize.The $23 level is crucial as it represents a potential turning point for the stock. If buyers are able to defend this area, it could lead to a reversal in the stock's price and a potential upward move. However, if the stock breaks below this level, it may continue on its downward path.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.Do you have a news tip for Investopedia reporters? Please email us at
[email protected].
