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Supermicro’s Stock Rallies Following Financial Report Submission

Key Takeaways

Shares of Supermicro experienced a significant 12% uptick on Wednesday after the company submitted its overdue financial documents in a timely manner, thereby averting a potential delisting from the Nasdaq. Prior to this filing, the stock had experienced a downturn for four consecutive trading sessions, but it found support at a critical technical level known as the 50% Fibonacci retracement.

The analysis of Supermicro’s stock indicates that investors should keep an eye on key price points around $63, $75, and $96, while also monitoring substantial support levels located near $48 and $38.

Company Compliance Restored

Super Micro Computer, Inc. (SMCI) saw its stock prices soar after announcing compliance with Nasdaq’s filing requirements, alleviating investor fears about not meeting the impending February 25 deadline. In the company’s statement, it was confirmed that “the matter is now closed,” reflecting a stabilizing sentiment among shareholders.

Over the past year, Supermicro shares have seen a decline of over 40% due to allegations surrounding accounting practices and corporate governance that delayed critical regulatory filings. However, since the beginning of the year, the stock has rebounded, increasing by 68%, spurred on by a positive business update projecting robust revenue growth, particularly in response to rising demand for AI infrastructure.

Technical Analysis: Fibonacci Support

Supermicro’s stock price has shown a notable increase recently, surging on higher trading volume after breaking out from a declining wedge pattern. However, it encountered selling resistance just above the long-term 200-day moving average.

Despite facing four consecutive days of losses as the filing deadline approached, the stock found critical support around the 50% Fibonacci retracement level calculated from its low to high earlier in the month, paving the way for the current upward movement.

Identifying Resistance Levels

Supermicro shares concluded Wednesday’s trading session at approximately $51, although the stock saw a 5% decline in after-hours trading.

The first significant resistance level to observe is around $63, where the shares may encounter selling pressure, particularly near the countertrend peak recorded in August. Should the stock surpass this threshold, it could potentially climb towards the $75 mark, a point where many investors who acquired shares at lower prices might consider taking profits due to historical trends.

Further gains could lead the stock toward the $96 level, an area of resistance where previous peaks have formed, closely approaching the all-time high of the shares.

Monitoring Key Support Levels

In the event of a price retracement, the initial support level to watch is approximately $48, situated just above the 50% Fibonacci level and backed by a trendline connecting key price movements from the preceding months.

Should there be a more substantial retracement, the stock might revisit lower support levels around $38. This price zone is noteworthy, given its relation to the significant September swing low and other key price points from late October and January, making it a potential entry point for investors.

The insights provided in this article serve informational purposes and do not constitute investment advice. It is advisable to conduct thorough research or consult with a financial advisor before making any investment decisions.

As of the time of writing, the author does not hold any shares in the above-mentioned company.

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