Super Micro floods the market with $7 billion in new stock — short the dip on ri

Thesis

When a company sells billions of dollars of new stock, it floods the market with shares and usually pushes the stock price down. Super Micro is dealing with this heavy selling pressure right as the broader tech sector is dropping due to a hot 4.2% inflation report. With bond traders betting on Federal Reserve rate hikes to slow the economy down, expensive tech stocks are likely to face even more pressure. This double-whammy of a dilutive stock sale and a tough economic backdrop sets up a potential continuation of the downward slide.

Strategy approach

Build a rule-based strategy that enters short SMCI on the 4-hour (H4) timeframe when the high of the current candle drops below the low of the previous day's session (bearish gap down) and the 10-day RSI is below 40. Exit the position if the price crosses back above the 10-day simple moving average, or place a 4% stop loss above the entry price. Limit the holding period to 15 trading days.

Markets and timeframes

Entry and exit at a glance

These are the named rules in the shared configuration. Review the full conditions below before using a strategy.

• Entry: RSI Signal Long (SMCI@4h) (2 conditions)
• Exit: Position Exit Rule (SMCI@4h) (2 conditions)
• Exit: SL: Below Support[1] (SMCI@4h) (1 condition)
• Exit: TP: Near Resistance[1] (SMCI@4h) (1 condition)

Shared strategy rules

{
  "data_dependencies": [
    {
      "symbol": "SMCI",
      "timeframe": "4h"
    }
  ],
  "entry_rules": [
    {
      "conditions": [
        {
          "left": {
            "field": "high",
            "type": "price"
          },
          "operator": "less_than",
          "right": {
            "type": "constant",
            "value": 0
          }
        },
        {
          "left": {
            "chart_ref": {
              "symbol": "SMCI",
              "timeframe": "4h"
            },
            "indicator": {
              "name": "rsi",
              "period": 10
            },
            "type": "indicator"
          },
          "operator": "less_than",
          "right": {
            "type": "constant",
            "value": 40
          }
        }
      ],
      "direction": "long",
      "enabled": true,
      "id": "entry_1",
      "name": "RSI Signal Long (SMCI@4h)",
      "priority": 1
    }
  ],
  "exit_rules": [
    {
      "applies_to": "both",
      "conditions": [
        {
          "left": {
            "field": "close",
            "type": "price"
          },
          "operator": "crossed_above",
          "right": {
            "chart_ref": {
              "symbol": "SMCI",
              "timeframe": "4h"
            },
            "indicator": {
              "name": "sma",
              "period": 10
            },
            "type": "indicator"
          }
        },
        {
          "left": {
            "field": "holding_period_bars",
            "type": "position"
          },
          "operator": "greater_than",
          "right": {
            "type": "constant",
            "value": 15
          }
        }
      ],
      "enabled": true,
      "id": "exit_1",
      "name": "Position Exit Rule (SMCI@4h)",
      "priority": 1,
      "purpose": "signal"
    },
    {
      "applies_to": "both",
      "conditions": [
        {
          "left": {
            "field": "close",
            "type": "price"
          },
          "operator": "less_than_or_equal",
          "right": {
            "rank": 1,
            "type": "support_level"
          }
        }
      ],
      "enabled": true,
      "id": "exit_2",
      "name": "SL: Below Support[1] (SMCI@4h)",
      "priority": 97,
      "purpose": "take_profit",
      "target_symbol": "SMCI"
    },
    {
      "applies_to": "both",
      "conditions": [
        {
          "left": {
            "field": "close",
            "type": "price"
          },
          "operator": "greater_than",
          "right": {
            "rank": 1,
            "type": "resistance_level"
          }
        }
      ],
      "enabled": true,
      "id": "exit_3",
      "name": "TP: Near Resistance[1] (SMCI@4h)",
      "priority": 100,
      "purpose": "stop_loss",
      "target_symbol": "SMCI"
    }
  ],
  "position_sizing": {
    "max_position_percent": 25,
    "method": {
      "resistance_stop_rank": 1,
      "risk_percent": 2,
      "type": "fixed_risk"
    },
    "min_position_value": 100
  },
  "trigger_timeframe": "4h",
  "version": 1
}

{
  "indicators": [
    {
      "name": "rsi",
      "period": 10
    },
    {
      "name": "sma",
      "period": 10
    }
  ]
}

{
  "data_dependencies": [
    {
      "symbol": "SMCI",
      "timeframe": "4h"
    }
  ],
  "entry_rules": [
    {
      "conditions": [
        {
          "left": {
            "field": "high",
            "type": "price"
          },
          "operator": "less_than",
          "right": {
            "type": "constant",
            "value": 0
          }
        },
        {
          "left": {
            "chart_ref": {
              "symbol": "SMCI",
              "timeframe": "4h"
            },
            "indicator": {
              "name": "rsi",
              "period": 10
            },
            "type": "indicator"
          },
          "operator": "less_than",
          "right": {
            "type": "constant",
            "value": 40
          }
        }
      ],
      "direction": "long",
      "enabled": true,
      "id": "entry_1",
      "name": "RSI Signal Long (SMCI@4h)",
      "priority": 1
    }
  ],
  "exit_rules": [
    {
      "applies_to": "both",
      "conditions": [
        {
          "left": {
            "field": "close",
            "type": "price"
          },
          "operator": "crossed_above",
          "right": {
            "chart_ref": {
              "symbol": "SMCI",
              "timeframe": "4h"
            },
            "indicator": {
              "name": "sma",
              "period": 10
            },
            "type": "indicator"
          }
        },
        {
          "left": {
            "field": "holding_period_bars",
            "type": "position"
          },
          "operator": "greater_than",
          "right": {
            "type": "constant",
            "value": 15
          }
        }
      ],
      "enabled": true,
      "id": "exit_1",
      "name": "Position Exit Rule (SMCI@4h)",
      "priority": 1,
      "purpose": "signal"
    },
    {
      "applies_to": "both",
      "conditions": [
        {
          "left": {
            "field": "close",
            "type": "price"
          },
          "operator": "less_than_or_equal",
          "right": {
            "rank": 1,
            "type": "support_level"
          }
        }
      ],
      "enabled": true,
      "id": "exit_2",
      "name": "SL: Below Support[1] (SMCI@4h)",
      "priority": 97,
      "purpose": "take_profit",
      "target_symbol": "SMCI"
    },
    {
      "applies_to": "both",
      "conditions": [
        {
          "left": {
            "field": "close",
            "type": "price"
          },
          "operator": "greater_than",
          "right": {
            "rank": 1,
            "type": "resistance_level"
          }
        }
      ],
      "enabled": true,
      "id": "exit_3",
      "name": "TP: Near Resistance[1] (SMCI@4h)",
      "priority": 100,
      "purpose": "stop_loss",
      "target_symbol": "SMCI"
    }
  ],
  "position_sizing": {
    "max_position_percent": 25,
    "method": {
      "resistance_stop_rank": 1,
      "risk_percent": 2,
      "type": "fixed_risk"
    },
    "min_position_value": 100
  },
  "trigger_timeframe": "4h",
  "version": 1
}

Trading agent generated from recommendation idea 'Super Micro floods the market with $7 billion in new stock — short the dip on rising inflation fears'. Thesis: When a company sells billions of dollars of new stock, it floods the market with shares and usually pushes the stock price down. Super Micro is dealing with this heavy selling pressure right as the broader tech sector is dropping due to a hot 4.2% inflation report. With bond traders betting on Federal Reserve rate hikes to slow the economy down, expensive tech stocks are likely to face even more pressure. This double-whammy of a dilutive stock sale and a tough economic backdrop sets up a potential continuation of the downward slide.

Performance

No trade count, win rate, or realized P&L figures are provided in this public preview. The thesis and shared rules do not establish a performance record.

What this public preview can establish

• The thesis and strategy approach describe a market view. They do not show whether an entry or exit condition is currently met.
• Technical strategy fields are shared above. Inspect the actual conditions and check when they were evaluated before relying on them.
• No trade count, win rate, or P&L figure is published in this preview. It cannot establish a performance record.

Explore

How CommonQuant researches and tests strategies · Public paper-trading record and its limits · Discover public strategies