Locking in More Chip Stock Gains on Discipline, Not FOMO
We’re also closely watching the RSI level for this other chip holding.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
MRVL | Sell | 415 | 170 | 695 | 2.0 |
After you receive this Alert, the Pro Portfolio will make the following trades:
-- Sell 415 shares of Marvell (MRVL) at or near $170. Following the trade, MRVL shares will account for roughly 2.0% of the Pro Portfolio's holdings.
To this morning’s opening comments, we can add the news that Meta (META) has agreed to use "tens of millions of cores" worth of Amazon’s (AMZN) general-purpose Graviton chips in a deal that will run for at least three years. Layered on top with Intel’s (INTC) outlook this is fueling another move higher in AI and data center-related stocks Friday morning. It’s also extending the overbought condition in some of them, such as Marvell, even further.
We are all for letting our winners run, but past a certain point, we have to bow to our discipline and ring the register, especially when a stock has had a stretch like MRVL has had over the last eight weeks. Over that time frame, the shares are up more than 125% and with today’s added push, their RSI level now stands at ~90. In other words, beyond what is considered an extremely overbought condition, with readings over 80 considered to be “intense euphoria” and “unsustainable momentum.”
While others may be reacting to FOMO and piling in at the wrong time, we’ll make another prudent move for the Pro Portfolio. With this latest trade, we have recovered all of our initial investment in MRVL shares and then some, so, as the saying goes, we're “playing with the house’s money.” Even though we continue to see AI adoption rising further and usage doing the same, and the added potential tailwind of autonomous driving down the road, that doesn’t mean we won’t be any less disciplined with our remaining MRVL position.
We will also flag shares of Broadcom (AVGO) and their current RSI level near 77 as we enact this trade. Should that figure push over 80 in the coming days, some additional prudence could be in the offing.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
Related: Wall Street Sold IBM’s Guidance — I Bought the Stock
More Pro Portfolio:
- Ringing the Register on Marvell Again and Adding to Another Holding
- We're Tracking 25 Signals Across 10 of Our Investment Themes
- Weekly Roundup: Widening Our Lead... But Storm Clouds Are Brewing
At the time of publication, the Pro Portfolio was long AMZN, AVGO, META, and MRVL.
