Marvell Technology Is Struggling to Bottom on the Charts

For his final “Executive Decision” segment of Monday’s Mad Money program, Jim Cramer checked in with Matt Murphy, CEO of chipmaker Marvell Technology (MRVL) .

Murphy said Marvell is doing “extremely well,” and this quarter was yet another “beat and raise” event for the company. All of Marvell’s end markets are up, especially the data center, where companies continue to rapidly digitize and move to the cloud.

5G wireless is another hot spot for Marvell, with growth up 30% sequentially for this quarter alone.

When asked about disruptions in China as Covid surges yet again, Murphy said the semiconductor industry has been dealing with disruptions for the better part of two years and still is growing. Demand is outstripping supply, he said, but every quarter they aim to produce more chips than they did last quarter.

We looked at the charts of MRVL last week  and wrote that “Aggressive traders could consider buying a starter position in MRVL at current levels. Risk to $62 and consider buying a bit more above $69. I am looking for a recovery rally to just below the $80 area.”

Let’s check the charts again as our long probe was quickly stopped out for a small loss.

In this daily bar chart of MRVL, below, we can see that prices made a new low close for the move down from early December. Prices are trading below the cresting 200-day moving average line. The On-Balance-Volume (OBV) line has matched the decline in prices and tells us that sellers of MRVL have been and are more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is bearish.

In this weekly Japanese candlestick chart of MRVL, below, we see a bearish picture. Prices are in an intermediate-term decline as they trade below the negatively sloped 40-week moving average line.

The OBV line is weak and pointed down. The MACD oscillator has been in a decline and is close to crossing below the zero line for an outright sell signal.

In this daily Point and Figure chart of MRVL, below, we see a downside price target of $56. Not far off.

In this weekly Point and Figure chart of MRVL, below, a price target of $35 is shown.

Bottom line strategy: Our long recommendation getting stopped out tells us something – the broad market is still weak and it can dominate individual names. Keep your powder dry and avoid the long side of MRVL.

(MRVL is a holding in the Action Alerts PLUS member club. Want to be alerted before AAP buys or sells this stock? Learn more now.)