Marvell Technology Group Ltd. designs, develops, and markets analog, mixed-signal, digital signal processing, and embedded and standalone ARM-based microprocessor integrated circuits. It offers mobile and wireless products comprising communications processors; modem processors; Wi-Fi and other communication protocols, including Bluetooth and/or FM. The company also provides a range of integrated data storage products, including hard disk drive; solid-state drive, hybrid hard disk drive, and optical disk drive controllers, as well as storage-system products. In addition, it offers networking products comprising cloud infrastructure products for home, private, and public cloud networks; and service provider infrastructure, including residential fiber access infrastructure and mobile Internet infrastructure. Further, the company provides printing ASIC products; digital video processing products; power management and green technology products, such as DSP switcher integrated regulators, analog switching regulators, and integrated power management IC products; and Smart-LED Lighting platform, as well as Smart Energy Platform driven by a Wi-Fi enabled microcontroller and integrated software.
To review Marvell’s stock, please take a look at the 1-year chart of MRVL (Marvell Technology Group, Ltd.) below with my added notations:
MRVL has been trading within a sideways rectangle for the last (3) months. Rectangle patterns form when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. What’s great about a Rectangle pattern is that it not only provides you with trading points of support & resistance, but it also gives clearly defined breakout & breakdown points.
For MRVL, the rectangle pattern formed a $9 resistance (red) and a $7 support (green). A break below $7 would also be a 52-week low breakdown.
The Tale of the Tape: MRVL has formed a rectangle pattern. The possible long positions on MRVL would be either on a pullback to $7, or on a breakout above $9. The short opportunities would be at either $9 or on a breakdown below $7.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT