We’ve entered the ‘Buy’ zone for SMCI
My focus on TA whilst rinsing out emotions has helped me catch some peaks and bottoms of popular stocks.
Read Most Recent:
Tickers that move with headlines are extremely volatile and hard to trade. The psychological barrier may be daunting but as the saying goes: we buy on extreme fear, likewise, we sell on extreme greed.
I will not write about the recent headlines but will solely be focusing on price action and technicals. Here are some reasons why SMCI is a good buy and what are the prices to look out for.
$Super Micro Computer (SMCI.US)$ has entered a good buy zone
1. SMCI collapsed far below (and is trading under) the lower BOLL Bands
I’ve illiterate this countless times. BOLL lines are highly dependable indicators as 95% of the price actions happen within the BOLL range. A breakdown below the BOLL bands (with force) indicates an overreaction and prices are expected to return to the BOLL range in the short term.
2. Retail dump, XL/L institutions buy
Tho my view is limited to the Nasdaq (MooMoo) money flows but many will agree it’s a good representation of the wide market action. Here are some stats at closing today:
Retails: Net ($230M) Outflow
XL/L Institutions: Net $75M Inflow
Tho my view is limited to the Nasdaq (MooMoo) money flows but many will agree it’s a good representation of the wide market action. Here are some stats at closing today:
Retails: Net ($230M) Outflow
XL/L Institutions: Net $75M Inflow
There was negligible selling pressure on XL/L orders throughout the day and the money flows clearly indicate panic selling from retails whilst institutions were scooping. This is a typical play and a reason why most retailers lose money.
A favourite quote of mine from Financial Trader David Paul:
“Institutions buy where the masses set their stop loss”
3. Price is bottoming on a 6-m falling wedge and next wave up, likely
A favourite quote of mine from Financial Trader David Paul:
“Institutions buy where the masses set their stop loss”
3. Price is bottoming on a 6-m falling wedge and next wave up, likely
Mapping the highs and lows within a 6-month time frame may unfavourably show a wide falling wedge but the headwinds are inclining towards a next wave up.
Moreover, In the late hours of today’s market, we have seen how the price retraced from the low of $395 to $444 (the lower range of the falling wedge) which signals a false breakdown. Please do not take this as a sign of an entry point just yet as we’re expecting another 1-2 more retests of the lower range before the market reverses.
4. Current P/E of 12x, against trading average P/E of 24x
SMCI commonly trades at a P/E of 24x or more and the current P/E of 12x signals borderline undervalue by company standards and even more when compared to the industry standards of the Semis that trades at 30x - 40x.
Current headlines aside, as long as SMCI continues to hold its current fundamentals, we see good potential for a sizable upside. If i were to put a number to it, it’s safe to expect SMCI to return to its average or beyond (+50%).
Current headlines aside, as long as SMCI continues to hold its current fundamentals, we see good potential for a sizable upside. If i were to put a number to it, it’s safe to expect SMCI to return to its average or beyond (+50%).
Price Range To Look Out For
$358 - Key Support (Highs of Jul & Nov 2023)
A breakdown below the falling wedge shows no support until the $358 level. This price point proves to be a major support level and personally, I will be adding aggressively at the stated price levels. I expect any price around this level to be within the consolidation range.
$715 - Risk Readjustment Point (Key Resistance + Projected Top of Falling Wedge)
This will be one of the key price points to look out for amid the recovery of the next wave up. $715 serves as a multi-point anchor - being the double bottom support in Apr’24 & May’24, the average of the 12-m price movement action and the top of the falling wedge range.
A breakout of $715 will reinstate SMCI's bullish trajectory but a failed attempt at this crucial resistance will entail a dive into the sub $200s. I will strongly suggest adjusting your position size when we’re at this stated price range which may include halving your positions and only proceeding to add if a breakout is confirmed.
Notes
1. These are solely my views and should not serve as financial advice. I do welcome visitors to my profile to check my previous posts on calling out the tops and bottoms of popular stocks in hindsight.
1. These are solely my views and should not serve as financial advice. I do welcome visitors to my profile to check my previous posts on calling out the tops and bottoms of popular stocks in hindsight.
2. SMCI reacts to headlines. Price actions and analysis will adapt to new headlines, especially if further unfavourable news are released. Nonetheless, my mid-long term views remains the same. Skip this ticker for a few weeks if you’re unable to stomach the volatility.
3. Feel free to disagree. I respect views that differ and prefers not to debate.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
GameOverBro : buy now?
cnkj OP GameOverBro : you could or you could wait till late Sep’24 due to seasonality. I’ve added my positions at $412 and would happily average down as Sep’24 is historically a bad month to trade.
GameOverBro cnkj OP : yeah I'm waiting too haha till end of sept