Monday, April 7, featured one of the strongest intraday reversals in recent memory as investors poured trillions into the stock market on the ‘fake news’ that President Donald Trump is considering a 90-day postponement of his latest tariffs.
One of the biggest winners of the day was the disgraced technology giant Super Micro Computer (NASDAQ: SMCI), which rallied more than 10% within the session and ended the day at exactly $33.
The upswing continued into the Tuesday pre-market, indicating SMCI shares would open near $35.20, meaning they enjoyed a further 6.66% rise in the extended session.
The overnight performance could be especially concerning to the growing number of Supermicro stock short sellers, who have taken the Monday surge as a sign that the equity is headed for a renewed collapse, per the data Finbold retrieved from Fintel on April 8.
Specifically, after the SMCI short volume ratio plunged to 38.81 on Friday, April 4, it again soared to 54.23 on April 7.
Are investors right to bet against SMCI despite the strong rally
The logic behind the bearish bets is easy to see. The rally that effectively canceled the expected Black Monday of 2025 has been driven by little other than hype and momentum, as none of the underlying causes for the preceding plunge have been addressed.
Not only has the claim that the tariffs may be postponed been debunked but it has also been revealed that the Trump administration has already rejected a deal with the EU that would set both sides’ dues at 0%. The U.S. and China are likewise moving to escalate the trade war even further, and the EU proposed a 25% retaliatory tariff.
Lastly, the SMCI rally appears especially fragile as there is no clear indication of what is causing the massive surge.
The company’s most recent highly positive development has been a late March partnership with Nvidia (NASDAQ: NVDA), meaning the surge may be driven by a mix of old glory, expected long-term effects of the agreement with the semiconductor giant, and a general sense that Supermicro equity remains oversold.
Despite the lack of a clear driver, SMCI short sellers appear set to face a squeeze on Tuesday unless there is another rapid intraday reversal – admittedly a plausible outcome for the session given the increasingly tense situation between the U.S. and China.
Featured image via Shutterstock
