Marvell Technology Group Ltd. (MRVL​) is a maker of integrated circuits incorporated into storage products including hard drives. The stock closed Monday at $23.38, up 68.6% year to date and solidly in bull market territory at 89.9% above its post-election low of $12.31 set on Nov. 10, 2016. The stock set its all-time intraday high of $24.22 on Nov. 22.

Shares of Marvell spiked higher last week after the company announced its plan to purchase Cavium, Inc. (CAVM​). Investors cheered this integration, which includes networking and data center strategies. (See also: Chipmaker Marvell Technology in Talks to Buy Cavium - WSJ.)

This merger strategy will be put to a test when Marvell reports earnings after the closing bell on Tuesday, Nov. 28. Analysts expect Marvell to report earnings per share of 30 cents to 34 cents, while they expect revenue to decline 6.4% year over year on weakness in hard-disk drives. This decline is expected to be offset the company's continued cost-reduction plans. Investors will be riveted on guidance relative to integrating Cavium into the company's longer-term growth strategy.

The daily chart for Marvell shows that the stock has been above a "golden cross" since April 19, 2016, when it closed at $9.90. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead. This bullish signal remains in play with the stock at $23.38. (For more, see: Top 4 Mutual Fund Holders in Marvell Technology Group.)

The weekly chart for Marvell

Weekly technical chart showing the performance of Marvell Technology Group Ltd. (MRVL) stockCourtesy of MetaStock Xenith

The weekly chart for Marvell is positive but overbought, with the stock above its five-week modified moving average of $20.53 and well above its 200-week simple moving average, also known as the "reversion to the mean," now at $13.68. This key average was last tested at $12.39 during the week of Nov. 11, 2016. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 86.65, well above the overbought threshold of 80.00.

The horizontal lines are the Fibonacci retracement levels of the decline from $36.83 in January 2006 to the low of just $4.48 in November 2008. Today's neutral zone is between the 50% retracement of $20.67 and the 61.8% retracement of $24.49.

Given this chart and analysis, my trading strategy is to buy weakness to my annual, quarterly and semiannual value levels of $21.30, $18.37 and $16.86, respectively, and to reduce holdings on strength to the 61.8% retracement of $24.49. (For additional reading, check out: Qualcomm and NXP Are Cheap Based on Marvell Takeover.)

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