Chart of the Day: Marvell Pulls Back to a Familiar Spot
The stock has bounced from this current level on several occasions. Here's what to know.
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It's back to the future for Marvell Technology (MRVL) , which recently moved back towards the $80 level, a spot that has been attractive to buyers at previous times.
You may ask, "Why is that area so important?" It's a good question. Basically big money investors/traders build valuation models to determine where a "fair value" is located. Stocks trade around this level, which is semi-static (valuation is not a constant). This is the price discovery phase, and proof that models actually work (in most cases). Stocks move up/down as a price multiple is established against peers and the industry.
Now, this is clearly getting away from the technicals for a moment, but there is some overlap between fundamentals and technicals. Hence, we look for a location in price that seems to show where buyers and sellers converge, and also a point where bulls say "that is enough selling, it's time to buy." That may not always work out for the best but in the long run the fundamentals dictate the action.
As for the chart, it shows miserable money flow that indicates sellers have been distributing the stock (selling). Moving average convergence divergence (MACD) is solidly on a sell signal, parabolic stop and reverse (SAR) is bearish and momentum is down. But as we said, this price level could be the spot where buyers enter; in previous instances the indicators were just as bad as current levels.
We like Marvell in TheStreet Pro Portfolio and rate is a One, or "buy at anytime."
At the time of publication, TheStreet Pro Portfolio was long MRVL.
