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Will The Golden Cross Yield A Double For Marvell Technology Group Yet Again

Apr. 01, 2013 7:38 AM ETMRVL
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Marc Liu's Blog
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As of this morning, Marvell Technology Group (MRVL) moved through the Golden Cross and changed its price trend positive. The Golden Cross is the technical condition whereby the 50 day average moves through the 200 day average. It shows that the short term average is leading the long term trend in a given direction.

In this instance, it signaled that the trend for MRVL is now up. This signal occurred at $10.50.

The last time this Golden Cross event happened to MRVL was in April 2009 (see the chart below). Interestingly, it was roughly the same time of year and at almost the identical price. What is really interesting is the price action that followed. In 2009, the change in trend was followed by a move in the stock price from $10.50 almost straight up to $16 before brief profit taking back to $13 and then an upside run to $22.

Given the cyclical nature of the semi-conductor business, it is not unreasonable to believe that history might repeat itself.

No one knows whether MRVL's price action will repeat but all the pieces are in place:

1 - MRVL is in a cyclical industry that is in the throes of turning around - as in 2009.

2 - MRVL's management has said that this quarter is the bottom of their business "trough " - as in 2009.

3 - Massive share repurchases (over 30% of the shares retired) should help boost lift off this time around - better than in 2009.

4 - Massive hedge fund buying should also boost lift off: David Einhorn - 52 million shares, Blackstone In c. - 35 million shares - better than in 2009.

Chart forMarvell Technology Group Ltd. (<a href='https://seekingalpha.com/symbol/MRVL' title='Marvell Technology, Inc.'>MRVL</a>)

Disclosure: I am long MRVL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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