The Russell 2000 index is comprised of 2000 stock components, with the most heavily weighted stock being Super Micro Computer (SMCI). This particular stock has garnered attention due to its volatility and its classification as an “AI” stock. With a market capitalization of $41.78 billion, Super Micro Computer has experienced frenzied trading, with significant price fluctuations in both directions.
The stock price of Super Micro Computer has experienced a rollercoaster ride, from around $250 in early January to a peak of just over $1200 in March. This represents a significant gain of 380% for those who bought early in the year and sold at the peak. Price chart analysts have noted a negative divergence of the relative strength indicator as the price increased, indicating potential instability in the stock.
On Friday, Super Micro Computer’s price dropped significantly after the announcement that the company would skip an earnings pre-announcement. The stock fell by 23% in one session, breaking through key support levels and closing well below the 50-day moving average. The price chart reflects impulsive trading and highlights the volatility of the stock.
The weekly price chart of Super Micro Computer showcases the stock’s rapid rise and subsequent sell-off, resembling the price movement of cryptocurrencies. The stock was trading at less than $100 before a breakout in 2024 that saw prices reach a peak of $350 before dropping back down to $713. The point-and-figure chart provides a detailed look at the rally and subsequent decline of the stock.
Despite its recent volatility, Super Micro Computer represents 1.48% of the Russell 2000 index by weight. The stock’s wild price swings have the potential to impact the small-cap ETF associated with the Russell 2000. The daily price chart further emphasizes the erratic trading patterns of Super Micro Computer, showcasing the stock’s ups and downs over a short period of time.
Overall, Super Micro Computer’s position as the most heavily weighted stock in the Russell 2000 index has drawn attention due to its extreme volatility and significant price fluctuations. Investors closely following the stock have noted the negative divergence in the relative strength indicator, indicating potential instability. As the stock continues to experience erratic trading patterns, its impact on the small-cap ETF within the index remains to be seen.
