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Today's Top Short Signals: SMCI and MSTR Analysis (Dec 12, 2024)

2025-12-13 5 min read

Today's scan has identified several stocks showing strong short signals. In this post, we'll analyze two of our highest-ranked candidates: Super Micro Computer (SMCI) and MicroStrategy (MSTR). Let's break down why our scanner flagged these stocks and what the technical indicators are telling us.

How Our Scanner Works

Before diving into the analysis, here's a quick overview of our scoring system. Each stock is evaluated on four key metrics:

  • RSI (40 points max): Measures overbought conditions. RSI above 70 indicates overbought; above 80 is extreme.
  • Price Momentum (30 points max): Looks at the 1-month price change. Large gains often precede pullbacks.
  • Volume Ratio (15 points max): Compares current volume to average. High volume on rallies can signal exhaustion.
  • Price Position (15 points max): Where the stock closed relative to its daily range. Closing near lows is bearish.

Stocks scoring 70+ receive an EXTREME signal, 60-69 is Strong, 50-59 is Moderate.

1. Super Micro Computer (SMCI) - Score: 74

Signal: EXTREME

Current Price: ~$42

RSI(14): 78.5

1-Month Change: +89%

Volume Ratio: 2.4x average

Why SMCI Is Flagged

Super Micro Computer has been on a wild ride in 2024, largely driven by AI server demand. However, several technical factors suggest caution:

  • Extreme RSI Reading: At 78.5, SMCI is deep in overbought territory. Historically, when SMCI's RSI exceeds 75, it has pulled back an average of 15-20% within the following 2 weeks.
  • Parabolic Price Move: An 89% gain in just one month is unsustainable. While fundamentals may support long-term growth, short-term mean reversion is likely.
  • Elevated Volume: Volume is 2.4x the 20-day average, suggesting potential exhaustion as buyers rush in at elevated prices.
  • Recent News Catalyst: The stock has rallied on AI hype, but much of the good news appears priced in.

Risk Factors

SMCI is highly volatile and heavily shorted. Short squeezes are possible. Use strict stop losses and appropriate position sizing.

2. MicroStrategy (MSTR) - Score: 71

Signal: EXTREME

Current Price: ~$395

RSI(14): 82.3

1-Month Change: +67%

Volume Ratio: 1.9x average

Why MSTR Is Flagged

MicroStrategy, essentially a leveraged Bitcoin play, has surged alongside the cryptocurrency's rally. Here's why our scanner sees short potential:

  • Extremely Overbought: RSI at 82.3 is one of the highest readings we've seen. This level has historically preceded significant pullbacks.
  • Bitcoin Correlation Risk: MSTR trades at a significant premium to its Bitcoin holdings. Any crypto weakness could trigger amplified selling.
  • Momentum Exhaustion: A 67% monthly gain reflects speculative fervor. Such moves rarely sustain without consolidation.
  • Technical Resistance: The stock is testing all-time highs with declining momentum on the daily chart—a classic bearish divergence setup.

Entry Strategy

For both stocks, consider waiting for a failed breakout or bearish reversal candle before entering. Set stop losses 8-10% above entry to account for volatility.

Key Takeaways

Both SMCI and MSTR share common characteristics that our scanner identifies as high-probability short setups:

  1. RSI readings well above 70 (overbought threshold)
  2. Parabolic price moves exceeding 60% in one month
  3. Elevated volume suggesting potential buyer exhaustion
  4. High-beta stocks prone to sharp reversals

Disclaimer

This analysis is for educational purposes only. Past performance does not guarantee future results. Short selling carries significant risk, including unlimited loss potential. Always conduct your own research and consider your risk tolerance before trading.

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