Super Micro’s Stock: Overbought and Bullish Momentum Ahead!
Traders, gather around because we’re diving into the meteoric rise of Super Micro Computer Inc. (SMCI) stock that has just hit an impressive six-month high! On Wednesday, the shares surged by as much as 19.1% during intraday trading, finally closing up 8% at an impressive $60.25 per share. This relentless rally is fueled by growing optimism surrounding the company’s potential to snag some significant artificial intelligence (AI) server deals. Buckle up, because this could be just the beginning!
Breaking Down the Numbers
Super Micro’s stock has seen an astonishing 56% gain during a five-day win streak, and it has skyrocketed a staggering 111.3% this month alone. To put that into perspective, we’re on track to witness the best monthly performance since May 2023, which saw an astonishing 112.4% surge. Such explosive movement is indicative of a stock rallying on adrenaline and bullish sentiment!
Indicators of Strength
But what does this all mean from a technical standpoint? Well, the rapid ascent of SMCI’s stock price comes with some noteworthy technical signals. One of the most respected momentum indicators, the Relative Strength Index (RSI), has catapulted to an eye-popping 80.38—the highest level seen in a year. Typically, when the RSI soars above 70, it hints at an “overbought” condition, suggesting that a stock may need to take a breather before continuing its upward trajectory.
But here’s where it gets interesting: being labeled “overbought” can be a misnomer. Many traders recognize that getting overbought can indicate underlying strength rather than weakness. Historical price actions of SMCI echo this sentiment. Each of the last three occurrences that the RSI climbed past the 80 mark resulted in sustained rallies. Just to give you a recent example, on January 23, 2024, the RSI hit 80.5 after a dramatic 47% surge over three days. The stock then maintained its momentum, rising in 15 of the following 17 sessions with an incredible 119.5% gain—before eventually experiencing a pullback.
Long-Term Trend Tracker
Add to this bullish narrative the fact that Super Micro’s stock has closed above its 200-day moving average for two consecutive sessions. Many traders view the 200-DMA as a significant long-term trend tracker, and the last time such a double-close occurred was back on August 1, 2024. This is an encouraging indication that longer-term bullish momentum may be firmly in play!
Key Resistance Levels to Watch
For those brave enough to ride the bullish wave, it’s crucial to establish potential upside targets. Previous support levels likely act as resistance now. Watch the $71 level closely, as this may present challenges for further advances. Following that, another crucial resistance zone lies within the $90 to $95 range where closing highs were recorded from May through July.
Final Thoughts
It’s exhilarating times for Super Micro investors. The bullish momentum hinted at by the RSI and the consolidation above the 200-DMA signals that we could be entering a new high territory soon. While the stock may be classified as “overbought,” historically, such conditions have acted as launch pads for further advances rather than roadblocks. Keep your trend-following strategies sharp and ready to make moves as SMCI continues to carve its path in the tech space. Stay tuned, the trend is your friend!