We have commented on the charts of Marvell Technology Group (MRVL) which just reported Wednesday night, a number of times in the past. Our last review was Nov. 30 when we wrote that " With the shares reaching our $46 price target and a number of bearish divergences grabbing our attention ahead of earnings on Thursday I would recommend booking profits here and standing aside until we see how the stock reacts on Friday."
Prices traded up into late January but the signals have turned from bullish to bearish.
Let's view the charts again now that TheStreet's quantitative service downgraded the stock to hold.
In this daily bar chart of MRVL, below, we can see that prices failed to make a new high in February and then turned low. Prices have broken below the cresting 50-day moving average line and are testing the rising 200-day moving average line. The On-Balance-Volume (OBV) line made a peak in January and has been moving lower telling us that traders have shifted from aggressive buying to aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator just broke below the zero-line for an outright-sell signal.
In this weekly bar chart of MRVL, below, we can see a weakening picture. Prices are testing the rising 40-week moving average line. The weekly OBV line shows weakness from the middle of February. The MACD oscillator just crossed to the downside for a take-profit sell signal.
In this daily Point and Figure chart of MRVL, below, we can see a potential downside price target in the $33 area.
Bottom line strategy: A quantitative downgrade on top of weakening charts is not a good combination. Continue to avoid the long side of MRVL, until a new bottom pattern develops.
(Marvell Technology is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells MRVL? Learn more now.)
