A Super Reason to Buy Super Micro Computer?
Reports of this AI stock potentially being added to the Nasdaq 100 have a us taking a close look once again.
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Super Micro Computer SMCI has been a superstar so far in 2024. With reports circulating that the stock could replace Walgreens Boots Alliance WBA in the Nasdaq 100 Index, let's check out the charts.
Some believe that once a stock is added to an index that demand will increase dramatically — and along with it the share price — as institutional investors rebalance their portfolios.
I am a bit skeptical of that in today's marketplace.
In the daily bar chart of SMCI, below, I can see that prices have been correcting lower after making a price high in March. SMCI is trading above the bottoming 50-day moving average line and above the rising 200-day moving average line.
The trading volume was very heavy in January and February but it has declined in the past four months. The On-Balance-Volume (OBV) line shows weakness since March. The Moving Average Convergence Divergence (MACD) oscillator has struggled the past two months.
In the weekly Japanese candlestick chart of SMCI, below, I see a mixed to bearish picture but certainly not a bullish setup. Prices are trading above the rising 40-week moving average line but I see a number of upper shadows over the past four months.
The weekly volume histogram has declined the past four months. The OBV line has weakened since early March. The MACD oscillator is in a corrective move and tells me that the trend strength has been weakening.
In this daily Point and Figure chart of SMCI, below, I see that the software is projecting a price target in the $1,069 area. A trade at $805 would weaken the chart.
In this weekly Point and Figure chart of SMCI, below, the software suggests a price target in the $1,544 area. Maybe. Maybe not.
Bottom-line strategy: I have no special knowledge of whether SMCI will be included in the Nasdaq 100. Will this help the stock price? Maybe, but I am not convinced that is a reason to go long.
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