The stock is trading around its quarterly pivot at $25.01 with its weekly chart projected to be negative this week unless investors show a surprise positive reaction to the report.
My call: Buy the stock on weakness to its 200-day simple moving average at $23.84 and to its semiannual value level at $21.39. Sell strength to its monthly risky level at $29.75, which is above its 2019 high of $28.38, set on Nov. 12.
Analysts expect Marvell earned 17 cents to 19 cents a share in its third quarter. The outlook is cloudy, according to Wall Street, as expectations have been cut over the past three months.
Before the earnings report, the Hamilton, Bermuda, semiconductor company completed a deal to sell its wireless connectivity segments to NXP Semiconductors (NXPI) - Get Report . This acquisition is expected to close in the first half of December.
Marvell has been a strong performer so far in 2019. The stock closed Monday at $25.81, up 59% year to date and in bull-market territory up 80% since trading as low as $14.34 on Dec. 26.
The stock is 9.1% below its 2019 high of $28.38, set on Nov. 12. The stock is a third below its January 2006 high of $36.83; at last check on Tuesday it was trading off 4% at $24.78.
Marvell is not cheap, trading at a p/e multiple of 47.09 with a 0.9% dividend, according to Macrotrends. The stock is hurt by the delay in trade talks with China.
The Daily Chart for Marvell Technology
Courtesy of Refinitiv XENITH
The daily chart for Marvell shows the stock has been above a golden cross since March 25. This buy signal occurred when the 50-day simple moving average rose above the 200-day simple moving average, indicating that higher prices would follow. That proved to the correct call.
When the stock traded as low as $14.34 on Dec. 26, that day proved to be a daily key reversal buy signal. This was confirmed by the close that day at $15.47, above the Dec. 24 high of $14.84.
The horizontal lines shown on the chart are the semiannual value level at $21.39 and the quarterly pivot at $25.01, which has been today's magnet. Above the chart is the risky level for December at $29.78.
The 200-day simple moving average is a buy level at $23.84.
The Weekly Chart for Marvel Technologies
Courtesy of Refinitiv XENITH
The weekly chart for Marvell Technologies will be negative this week if the stock ends the week below its five-week modified moving average of $25.55.
The stock is well above its 200-week simple moving average or reversion to the mean at $18.08, last tested during the week of Dec. 28 when the average was $15.27.
An investment strategy is to buy on weakness to this key moving average. The 12x3x3 weekly slow stochastic reading is projected to decline to 58.54 this week down from 62.19 on Nov. 29.
Trading Strategy: Buy weakness to the 200-day simple moving average at $23.84 and add to positions on weakness to the semiannual value level at $21.39. Reduce holdings on strength to the monthly risky level at $29.75. Its quarterly pivot is 25.01.
How to use my value levels and risky levels:
Value levels and risky levels are based upon the past nine monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on Dec. 31, 2018. The original annual level remains in play.
The close at the end of June 2019 established new monthly, quarterly and semiannual levels. The semiannual level for the second half of 2019 remains in play.
The quarterly level changes after the end of each quarter so the close on Sep. 30 established the level for the fourth quarter.
The close on Nov. 29 established the monthly level for December.
My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in.
To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.