Semiconductor manufacturer Marvell Technology (MRVL) is the 'Stock of the Day' Friday at Real Money. We looked at the charts of MRVL on July 17 and things looked much stronger at that time. We concluded that "MRVL is breaking on the upside. Traders and investors could go long here risking a close below $23 with targets of $30 and then $34."
This Action Alerts PLUS holding reported results Thursday night beating on revenues and EPS, but providing weak guidance based in part on the ongoing ban on U.S. companies doing business with Huawei.
MRVL could open around $22.60 Friday morning based on pre-market activity. Let's review the charts again keeping that in mind.
In this daily bar chart of MRVL, below, we can see that prices peaked in late July and quickly declined towards $23. The slope of the 50-day moving average line turned flat from rising and the underside of the line has acted as resistance this month.
The slope of the 200-day line is positive and it intersects down at $21.
The trading volume has been declining since April and the On-Balance-Volume (OBV) line peaked with prices in late July.
The Moving Average Convergence Divergence (MACD) oscillator moved below the zero line earlier this month for an outright sell signal. Definitely not the scenario I had in mind.
In this weekly bar chart of MRVL, below, we can see that prices are above the rising 40-week moving average line but the line intersects above $21 now. The weekly OBV line is still in an uptrend but the MACD oscillator crossed to a take profits sell signal in early August.
In this Point and Figure chart of MRVL, below, we can see a potential downside price objective of $21.58 being projected. A decline like this would put MRVL close to the $21.47 low of late May. If this low breaks we are likely to see further declines.
Bottom line strategy: It looks like our long recommendation of July could be stopped out today. Successful traders are right on a series of trades, not all trades.