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Running A Marathon On A Treadmill (MRVC)

Shares of MRV Communications (OTC: MRVC) traded briskly today. The 2.1 million shares traded for the session ran nearly 15 times greater than the average daily volume for the stock. There appeared to be no related news items to cause the volume avalanche that occurred during the second full hour of the trading session. In the midst of the volume blizzard, the stock managed to hit a new annual low when it traded for $0.49.

Traders all but gave the stock a cold shoulder at the opening, as volume barely registered and the price remained the same from the previous day’s close at $0.52. The interest of traders perked a bit after the first 30 minutes of the session, but not enough to move the price. After the second-hour volume spike and price plunge, the stock quietly rebounded to end the day unchanged at $0.52. Traders will be wondering if the surge in volume and a bounce at the end of the day mean the sellers have exhausted their arsenals.

MRV Communications announced a week ago that it had concluded the exploration to find alternative strategies to divest the company’s Network Integration business and concentrate on the growth of the Optical Communications Systems business. Traders greeted the news with a five-day-long selloff, culminating in today’s new 52-week low.

Since hitting an annual high of $1.20 last December, shares prices have cascaded down like water going over a series of little waterfalls. As the calendar turned to the New Year, MRV Communications looked to shift its management team, which may have underlined the angst that traders started to feel about the stock.

On May 2, 2012, the company announced a special dividend of 30 cents per share paid to holders of record on May 25, 2012. Share prices took a hit, adjusting for the dividend. Buyers have not been able to mount a meaningful rally since that time.

Newsletters found on Stockreads.com remain silent on the stock. A total of 18 promotions for MRV Communication can be viewed on Stockpromoters.com, though none are recent. With the stock hitting new lows on heavy volume, one would expect some chatter on Twitter. However, none could be found.

The Chatsworth, California, company provides optical communications network and services to telecommunications operators, corporate and consumer high-speed Internet service providers, and local municipalities. MRV Communications operates through two business lines, the Network Equipment Group and the Network Integration Group. Competitors in the industry include well know names like Cisco (NASDAQ: CSCO), Tellabs (NASDAQ: TLAB) and Alcatel Lucent (NYSE: ALU). The company was founded in 1988.

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ([email protected]) or his Google+ page (https://plus.google.com/103338576216002376250).



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