Tailwinds Not Done Blowing for Semiconductor Stock

SMCI boasts a jaw-dropping 329.9% year-over-year lead

Digital Content Manager
Sep 19, 2023 at 2:08 PM
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Super Micro Computer Inc (NASDAQ:SMCI) stock is up 1.6% at $248.40 at last check, bucking today's broader market selloff after Barclays initiated coverage with an "overweight" rating and $327 price target.

The equity already boasts a jaw-dropping 329.9% year-over-year lead, culminating in a Aug. 7, record high of $356.99. Despite a 9% drawdown in September, the $240 level has stepped up as support. And if past is precedent, SMCI could be ready to rally soon, after this pullback has sent the stock near a historically bullish trendline.

That $240 level also happens to be within one standard deviation of the stock's 100-day moving average. Per Schaeffer's Senior Quantitative Analyst Rocky White, SMCI saw six similar signals in the past three years, defined for this study as having traded north of the moving average 80% of the time in the past two months and in eight of the last 10 trading days. The stock finished higher one month later 83% of the time with an average 21.3% gain. A comparable move from its current perch would place shares back above $300.

SMCI 100 Day

There is ample room for pessimism to unwind. First in the options pits, per the stock's  Schaeffer's put/call open interest ratio (SOIR) of 1.67 that stands in the top percentile of annual readings. There's also short squeeze potential, with short interest off by 18.9% in the most recent reporting period yet short interest still making up 7.6% of the security's available float.

Those looking to bet on SMCI's next moves should consider doing so with options. The equity's Schaeffer's Volatility Index (SVI) of 59% sits in the 14th percentile of its annual range, suggesting options traders are currently pricing in low volatility expectations. Plus, the stock's Schaeffer's Volatility Scorecard (SVS) sits at a high 82 out of 100. In other words, the shares have exceeded options traders' volatility expectations over the past year.


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