Trade of the Day: Oracle Corporation Is Worth a Stab

orcl stock - Trade of the Day: Oracle Corporation Is Worth a Stab

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Software giant Oracle Corporation (NYSE:ORCL) reported its latest batch of earnings this Monday. Investor reaction was to hit the sell button, sending the stock sharply lower. While the selling was severe, ORCL stock now as a result also arrived at a better technical support area where a bounce could occur.

Specifically, Oracle came in with below-estimate results for its fiscal third quarter and gave guidance that offered reasons for concern in its important cloud computing business. This down-gap in the stock following the earnings report once again frustrated investors as the stock seemingly can’t get out of its own way, at least not since the summer of 2017.

I firmly believe that one of the easiest ways for investors and traders alike to lose money in the markets is by attempting to “trade” choppy sideways markets. However, range-bound markets — particularly if said range is very well defined, as it is in the case of ORCL stock — do offer opportunities to “buy the dip” and “sell the rip.”

Oracle Stock Charts

Click to Enlarge

Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week

To put some perspective around the big-picture price action of ORCL stock, let’s note that on the long-term chart the stock staged a critical breakout in June of 2017. The blue line on the chart shows that last summer the stock managed to finally overcome its previous all-time highs from the year 2000. While the breakout move was a positive, as a result at the time the stock had also jumped right to the upper end of its multiyear up-trend and also reached meaningful overbought readings from a momentum perspective.

None the less, ORCL stock since the summer of 2017 has been consolidating sideways, which all else being equal still offers a good probability of ultimately seeing the stock rise higher again.

Click to Enlarge

Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day

On the daily chart, we see the sideways movement of Oracle stock a little better. Note that following this past Tuesday’s gap-down, i.e. post-earnings sell off the stock now reached a support level around the $46 mark that not only held as support in January and February but also acted as previous resistance in the spring of 2017. All in all, this is a critical juncture for ORCL.

Active investors and traders looking to take a chance could buy some Oracle stock around these levels, using a stop loss around $45.50 and an upside price target near $49.

Check out Anthony Mirhaydari’s Daily Market Outlook for March 22.

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