Shares of Oracle Corporation (NYSE:ORCL) came under some pressure on Thursday on the back of an analyst downgrade. While the damage was contained, the charts point to a possibility of further losses ahead for ORCL stock in the near term.
Like most of the technology sector, shares of Oracle are having a good performance this year, up close to 30%. It is notable however that the stock just two months ago the stock was up closer to 40% for 2017 and that the post-earnings dynamics, i.e. price action is starting to be concerning.
As a side note and as regular readers of this column are well aware of, my trading and investing process starts from top to bottom meaning that given the stock market’s high correlation, I assign more weight with what is taking place on a sector and group level of stocks and then find single-name stocks to express those views with.
With ORCL stock, the broader technology sector remains very bullish, as indeed too does the stock through the intermediate term lens. However both the tech sector and ORCL stock are trading near the very upper end of their respective trading ranges where in my eye odds of at least some consolidation are high.
ORCL Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
To illustrate this, let’s look at the multi-year weekly chart of ORCL stock where we see that the stock in September bumped into the upper end of its long-term up-trending range and that it has been consolidating since.
Again, this spells no concerns yet for the stock through the longer or possibly even the intermediate term.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
On the daily chart however we see that ORCL stock rallied sharply right into its Sept. 14 earnings report after which it promptly gapped lower and fell 8% in one day.
Such gaps in charts often times are important tells about investor psychology in a stock and offer high-probability opportunities in all-time frames, including intraday. For those unfamiliar with the power of gaps I am holding a special webinar on Nov. 15 for InvestorPlace readers. Register HERE.
Although ORCL stock did find somewhat of a bid in the month of October, this bid over the past week or so has come under renewed pressure. With Thursday’s down-day the stock now sits near a confluence zone of technical support made up of the black diagonal as well as its yellow 50- and blue 100-day simple moving averages.
Odds here seem to favor a push lower into the mid $40s for the time being while any strong bullish reversal back above the $51 mark would call off the near-term weakness.
Check out Anthony Mirhaydari’s Daily Market Outlook for Nov. 10.
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