The recent market pullback has come at the tail end of earnings season. Most companies have beaten their earnings expectations, and some have even shown that corporate America remains strong. But rising uncertainty means that even great companies are taking a hit now.
That fear is hitting the tech space particularly hard. Technology companies have been leading the market higher over the past two years, and now a more defensive market posture is leading to a big pullback in tech names.
That’s even true of companies reporting solid earnings and which still have strong long-term potential. That includes Marvell Technologies (MRVL).
Despite an earnings beat and increased sales, Marvell shares sank by double-digits last week on the news.
Operationally, shares have been struggling as the chipmaker has been retooling over the past year. But the latest earnings swung shares to a profit, and Marvell is fairly priced for the space at 22 times earnings.
Action to take: Marvell shares are now negative over the past year, unwinding what had been substantial gains. However, at this valuation shares are near a heavily traded zone, and could find some support in the low $70 area. Contrarian buyers may like shares here.
For traders, shares may be due for an oversold bounce. The May $85 calls, last trading for about $3.80, could see mid-double-digit returns or better in the weeks ahead. Traders may want to take quick profits on any strong day for the markets.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.