Super Micro Computer, Inc. (NASDAQ:SMCI) is trading lower Tuesday. But there is a chance the recent selloff may be over. As you can see on the chart, it has reached a level that has been a support before.
Super Micro is our Stock of the Day. Shares can reverse and rally after dropping to support and that could happen here.
In January 2025, it trended lower until it reached levels around $27.75. When this happened, the selling ended and Super Micro traded higher.
Stocks can rally off support levels because of impatient and anxious buyers.
These traders and investors become concerned that they will miss out on their trade. They know the sellers will go to whoever is willing to pay the highest price.
So they increase their bid prices or amount, they are willing to pay. Other anxious buyers see this, and they do the same thing. It results in a snowball effect or bidding war that can force the shares into an uptrend.
In April and again in May, Super Micro fell back to the $27.75 level. Once again, it found support.
Levels that had been support previously can become support again because of remorseful sellers. These are people who regret selling shares at the support level when they rallied after.
If the stock eventually falls back to their selling price, they place buy orders. If there are enough of these buy orders, what had been a support level can become a support level again.
Now Super Micro has dropped back to this important level once more.
If there is a large number of remorseful sellers placing buy orders, there could be support at the level again. And if some of these buyers become anxious and impatient, they could force the stock into an uptrend.
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