Super Micro Computer makes a retaliatory rebound! From the altar to the bottom, is it ready for a glorious turnaround again? (2024.12.04)

Hello everyone, this week's 【Technical Tracking】 will analyze the former artificial intelligence (AI) star stock - Super Micro Computer. $Super Micro Computer(SMCI.US)$ In recent months, Super Micro Computer has been caught in the whirlpool of accounting fraud allegations, leading to a significant drop in its stock price. However, the situation seems to have taken a turn for the better recently, prompting a sharp rebound in its stock price. From market darling to outcast, can Super Micro Computer make a spectacular turnaround?

Hot Events

On December 2, 2024 (Monday), Super Micro Computer issued a statement saying that after a review by the company's board of directors' special committee and external lawyers, no fraud or misconduct by management or the board was found; at the same time, the company announced the appointment of a new chief accounting officer to strengthen financial management. Once the news broke, Super Micro Computer's stock price surged, ending the day with nearly a 29% increase.

Super Micro Computer's stock price has undergone a thrilling journey this year. From the historic peak set in March to the trough of the 52-week low in mid-November, the stock price plummeted by 86% at one point. Now, the wheel of fate has turned again, with the stock price rebounding more than double from the Bottom Rebound. To help everyone better grasp this dramatic turnaround, let's review the wave of 'fraud allegations' that Super Micro Computer has experienced:

● At the end of August, short-seller Hindenburg Research published a short report, accusing Super Micro Computer of accounting fraud and other issues.

● Super Micro Computer quickly announced a delay in submitting its annual report for fiscal year 2024, aimed at conducting an internal review.

● The Nasdaq Exchange issued a notice of violation to Super Micro Computer, warning that it may face the risk of delisting.

● At the end of October, the auditing Institutions of Super Micro Computer, Ernst & Young, suddenly announced their resignation, stating they were unwilling to associate with the company's financial statements and expressed concerns regarding the company's governance structure and transparency.

● On November 5, Super Micro Computer announced the preliminary investigation results of the special committee, stating there was "no evidence indicating that management or the board had engaged in fraud or misconduct."

● On November 18, Super Micro Computer submitted a compliance plan to the Nasdaq and announced the hiring of a new auditing Institutions.

● On December 2, Super Micro Computer issued a statement indicating that the special committee had completed a comprehensive review and reiterated that "there is no evidence of fraud or misconduct," and the company will not restate historical financial statements.

After experiencing this astonishing turmoil, investors seem to have temporarily released their burdens, and the influx of Bids acted like a shot of adrenaline, stimulating a strong rebound in Super Micro Computer's stock price. However, it may be premature to assert that the crisis has been averted. To some extent, if Super Micro Computer had no issues, why would the auditing Institutions Ernst & Young decisively choose to resign? Why did the company's financial executives undergo a large-scale personnel change?

Technical Analysis

Trend analysis:

The daily chart shows that Super Micro Computer's stock price reached a historical peak of $122.90 in March of this year, followed by three rounds of significant declines, ultimately falling to a 52-week low of $17.25 in mid-November. In the following weeks, the stock price experienced a dramatic reversal, soaring over 100%, accompanied by a surge in Volume, highlighting extremely exuberant market sentiment.

Indicators interpretation:

● The stock price of Super Micro Computer has recently broken above the 50-day moving average (MA50), suggesting a bullish short-term trend; however, the stock price remains significantly below the 200-day moving average (MA200), indicating that the medium to long-term bearish trend has not been effectively reversed.

● In terms of Volume, the cumulative Turnover Ratio over the last three trading days has exceeded 100%, highlighting a highly speculative market atmosphere and indicating considerable uncertainty in the market outlook.

● The MACD Indicators generally align with the stock price trend, having recently broken above the zero line, suggesting that upward momentum may further consolidate.

● The KDJ Indicators briefly broke above the overbought threshold of 80 and have hovered around this point for several days, indicating that the market may be in a short-term overbought state, but it also reflects the current trend's exceptional strength, with the upward momentum likely to continue.

● Pay attention to the potential resistance level near 50 dollars. This price point not only represents the peak from mid-October but has also served as effective resistance in densely traded price areas multiple times, becoming an important psychological barrier for investors.

Overall, although the stock price of Super Micro Computer has doubled in just two weeks, this reflects more of a revenge rebound rather than a fundamental reversal of the medium to long-term trend. Investors should closely monitor the potential support near the 50-day moving average, as this may be a key indicator for assessing short-term market sentiment.

This content discusses technical analysis; other methods, including Fundamental Analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect expected results.

All investments involve risks, including the potential loss of principal, and there is no guarantee that any investment strategy will be successful.