Naked Chart Trading: STX 28 May 2024

Due to the demand for high-capacity HDD products driven by AI, coupled with reduced production by hard drive manufacturers, the overall HDD supply is unable to meet demand, leading to soaring prices. According to a formal letter from Seagate to its customers, demand recovery continues across several segments of their business, and the reduced manufacturing capacity is limiting their ability to meet all of their customers’ demand and is resulting in longer lead times. Additionally, ongoing global inflationary pressures continue to impact costs.

As a result, Seagate Technology will implement price increases for new orders and demand exceeding previous commitments, and they anticipate ongoing supply constraints, indicating that prices will continue to rise in the coming quarters.

At least I do not see a crazy price surge for Seagate as a response to rapid AI development. From long term weekly chart, the trend indeed more to bearish and based on the recent trend, the share prices are testing historical high around USD118 level.

Refer to shorter time frame, Seagate's prices are moving in range USD82 - USD102 pending breakout, with green and red candlesticks mixed, indicated the trend now yet strong enough to start a bull momentum. Bear in mind that the trend is still bullish, so to me I am still positive to include HDD stock in my AI development portfolio for fundamental play.

Based on Fibo analysis from Jan 2022 high to Oct 2022 low, the share prices are testing 61.8% around USD90, breakout from sideway USD82 (50% Fibo) or USD102 for the next trend. Next support levels are 38.2% USD75 and 23.6% USD62.

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