Super Micro Computer (SMCI) shares experienced another drop on Tuesday following the disclosure of a short position by Hindenburg Research. The research firm published a report accusing the server maker of accounting anomalies and other issues after conducting a three-month investigation that included interviews with former senior employees.
While Nvidia (NVDA), another AI company, has seen a sharp rebound leading up to its quarterly earnings report after a recent correction, Super Micro shares continue to struggle towards their August low. Concerns have arisen that more expensive next-generation AI chips could potentially impact profit margins.
The stock fell by 2.6% during regular trading on Tuesday and then dropped an additional 1.5% to $593.30 in after-hours trading. Since the beginning of the month, the stock has declined by more than 20%.
### Technical Analysis
#### Failed Retest of Descending Triangle
After reaching a record high in early March, Super Micro shares moved within a descending triangle before breaking below the pattern’s lower trendline last month. Following this breakdown, the price attempted a retest but encountered selling pressure near the 200-day moving average. Additionally, the 50-day moving average has approached the 200-day moving average, suggesting a potential formation of a death cross, which often signals the start of a new downtrend.
Given the weak technical indicators on the company’s chart, investors should keep an eye on key price levels that could influence future movements.
#### Monitor These Price Levels Amid Further Weakness
The first crucial area to watch is around $479, near the August low. If buyers can defend this level, there may be a potential bounce since it represents a local bottom from the stock’s decline between mid-July and early August. A confirmation of oversold conditions, indicated by the Relative Strength Index (RSI) dropping below 30, could also support a rebound at this level.
Should the stock fail to hold at $479, it could slide down to $357, where a trendline connecting two peak points in August 2023 and January this year might attract buying interest. These peaks represent previous record highs for the stock.
Further downward movement could lead to the $260 region, where investors might look for buying opportunities near the June swing high. This level capped an impulsive move higher between late April and early June 2023 and aligns with various trading levels observed from August to December last year.
### Conclusion
In conclusion, Super Micro Computer’s stock price has been under pressure following allegations of accounting anomalies and other issues raised by Hindenburg Research. Technical analysis indicates a failed retest of a descending triangle and potential formation of a death cross, signaling a possible downtrend.
Investors should monitor key price levels at $479, $357, and $260 to gauge potential support areas and buying opportunities. The stock’s performance in the coming days will likely be influenced by market sentiment and developments within the company.
As always, investors are advised to conduct their own research and consider all factors before making investment decisions.
