Super Micro Computer (SMCI) develops and manufactures high-performance server and storage solutions.
The stock of the San Jose-based company has surged higher in the past few months. Indeed, last week the stock surged on strong fourth-quarter guidance. Does it have more upside or should we grow cautious?
Let's check out the charts and indicators.
In the daily bar chart of SMCI, below, I see a stock that has rallied more than three-fold in the past 12 months. The shares gapped higher last week and surged to new highs. SMCI trades above the rising 50-day moving average line and above the rising 200-day moving average line.
The trading volume has increased since December as more investors have been attracted to this name. The On-Balance-Volume (OBV) line has risen the past year and tells me that buyers of SMCI have been more aggressive than sellers. The Moving Average Convergence Divergence (MACD) oscillator is bullish.
In the weekly Japanese candlestick chart of SMCI, below, I see a bullish setup. The shares are in a longer-term advance and trade above the rising 40-week moving average line. There are no top reversal patterns and the most recent bullish candle negates the earlier upper shadows.
The weekly OBV line shows us a three-year rise and that helps to confirm the price gains we have seen. The MACD oscillator has been bullish (above the zero line) the past three years.
In this daily Point and Figure chart of SMCI, below, I can see that the software is projecting a potential upside price target in the $238 area.
In this weekly Point and Figure chart of SMCI, below, I can see the same price target as the daily chart -- $238.
Bottom-line strategy: Traders could probe the long side of SMCI on a dip into the $135-$130 area. Risk $10 from entry. The round number of $200 is my first price target.
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