Supermicro Price Levels to Watch As Stock Soars Following Plan to Avoid Delisting

Super Micro Computer (SMCI) shares soared in premarket trading Tuesday after the beleaguered server maker said that it has appointed a new auditor and submitted a compliance plan with Nasdaq to meet its listing requirements.

The company late Monday named BDO USA as its auditor and outlined in its compliance plan that it will now be able to complete its 2024 annual report and September quarterly report, though it did not provide specific dates.

Shares in the one-time artificial intelligence (AI) darling have lost more than half their value over the last month through Monday’s close as delisting fears intensified in late October following the resignation of the company’s former auditor after a series of accounting issues. Those issues, in part, contributed to the firm delaying its Nasdaq financial reporting requirements.

The stock was up 25% at around $27 shortly before the opening bell Tuesday.

Below, we review Supermicro’s weekly chart using technical analysis and point out important price levels that investors may be watching out for.

RSI Indicator Moves Out of Oversold Territory

After topping out in early March, Supermicro shares traded within a descending broadening formation before breaking down below the pattern towards the end of last month.

Declines accelerated into early November before the stock found buying interest late last week just below the closely watched 200-week moving average (MA).

While the relative strength index (RSI) signals bearish price momentum with a reading hovering just above 30, the indicator has moved out of oversold territory this week and sits poised to continue rising after Tuesday’s jump.

Looking ahead, let’s identify three key overhead levels on Supermicro’s chart that could come into play during a recovery and also discuss a major support area to track if the stock’s longer-term downtrend continues.

Key Overhead Levels to Monitor

Following Tuesday’s news-driven pop, investors should watch how the stock responds to the $30 level. This location finds 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.

Further buying may fuel a rally up to the $39 region, an area on the chart where investors who purchased the stock at lower levels could look for exit points near the September trough that preceded the steep October sell-off.

A more bullish move could see the shares revisit overhead resistance around $64, a location that may encounter selling pressure near the 50-week moving average and the descending broadening formation’s upper trendline.

Major Support Area to Watch

During retracements, investors should monitor if buyers can defend the $23 level. This chart area could provide support near the 200-week MA and the lower trendline of the narrow consolidation range mentioned above.

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.