FX168 Financial News (North America) reported that Super Micro Computer (SMCI) led the decline in the nasdaq on Wednesday after news emerged that the struggling server manufacturer would postpone its submission of the first quarter financial report. Subsequently, the company's stock continued to decline in after-hours trading.

The company stated in October that it could not predict when it would submit its 2004 annual report, which is a requirement under nasdaq listing rules. The delay in the company’s reporting stems from the resignation of its auditor Ernst & Young last month, which had previously pointed out issues with the company's governance and internal controls.

From the end of October to Wednesday's close, Super Micro's stock price has decreased by more than half, and has dropped approximately 28% since the beginning of this year. The stock fell 6% during Wednesday's regular trading session and then dropped another 6% to around $19 in after-hours trading.

(Image source: finance.yahoo)

The expansion of the wedge breakout continues.

Super Micro's stock traded within an expanding downward pattern for eight months before decisively breaking below the downtrend line of that pattern with above-average volume at the end of last month.

Recently, the sell-off of the stock has continued, with the relative strength index (RSI) dropping below the 30 threshold, confirming the bearish price momentum. However, the oversold reading of the indicator has also increased the possibility of a rebound.

Important support levels worth monitoring.

In the event of further declines, investors should pay attention to the stock price's reaction to the $17 level, which may find support near a series of comparable trading levels prior to the gap that may break in late May 2023.

If the bull market fails to hold this level, the stock price could fall to around $12, which acts as a downward support level. Investors might look for entry points to buy and hold near the area around the three peaks formed on the chart between March and April of last year.

Key resistance levels to watch.

During the oversold rebound, the $23 level is worth monitoring, as stocks may encounter selling pressure near the trendlines connecting multiple troughs appeared on the chart from June to October of last year.

Finally, a more bullish upward reversal may push the stock price up to around $30. Investors may seek to sell stocks in this area near the trendlines under an expanded formation, which also aligns with the top of the previous trading range formed in the second half of last year.