Chart of the Day - Tuesday, April 9, 2024

🏆 Today’s Chart of the Day was shared by Mike Zaccardi (@MikeZaccardi).

• Super Micro Computers ($SMCI) is up +218% year-to-date, and it's only April. It's the best-performing stock in the S&P 500 by a wide margin, up 3x the second-best ($NVDA).

• However, $SMCI has struggled since being added to the S&P 500. It peaked just two days before and is currently down -24%. Momentum has deteriorated, with RSI at a four-month low of 44.

• Mike points out that $SMCI has formed a potential Head & Shoulders Top over the past two months. It's not the cleanest H&S pattern, but the general structure is there. That said, if this bearish pattern fails, it could spark a sharp leg higher, as we saw with $NVDA in October.

The takeaway: The top stock in the S&P 500 has formed a potential top, but if this topping pattern fails, expect a sharp recovery to record highs and beyond.