Oracle Corporation (ORCL) provides software and information technology products for on-site applications on customized hardware and software for cloud-computing services. The stock closed Thursday, Sept. 13, at $48.96, up 3.5% year to date and 15% above its 2018 low of $42.57 set on June 20. The stock set its all-time intraday high of $53.48 on March 13 and is 8.5% below this level.
Analysts expect Oracle to report earnings per share of 61 cents when the company discloses results after the closing bell on Monday, Sept. 17, for its quarter ended in August. When the company reported earnings on March 19, it beat earnings per share estimates, but the stock gapped lower by 10% from the March 19 close to the March 20 open on disappointing growth in cloud computing revenue. On June 19, the company beat estimates again, but the stock again took it on the chin, trading to its 2018 low of $42.57 on June 20. Zacks Equity Research opines that investors should dump shares of Oracle now, forecasting that favorable returns appear unlikely in the near term. However, the daily and weekly charts below do not forecast a bleak outlook for the stock. (See also: Oracle Stock Seen Rising 11% Despite Red Flags.)
The daily chart for Oracle
Oracle began 2018 above a "golden cross" that was confirmed back on Feb. 24, 2017, when the stock closed at $43.17. Shortly after the March 20 price gap lower, this positive signal ended with a "death cross" that was confirmed on April 6. The stock then traded below my annual pivot of $51.70, which is the highest horizontal line on the chart. A "death cross" occurs when the 50-day simple moving average slips below the 200-day simple moving average, indicating that lower prices lie ahead.
This tracked the stock to its 2018 low of $42.57 set on June 20. This low is shown as the price gap lower on June 20 that followed the negative reaction to earnings on June 19. The rebound from this low reached its semiannual pivot of $45.41 on July 6, which is the lowest horizontal line on the chart. The rebound continued to my quarterly pivot of $48.40, as shown by the higher of two horizontal lines at the middle of the chart. As September began, strength has the stock above my monthly and quarterly pivots of $48.12 and $48.40, respectively, as a "golden cross" was confirmed on Sept. 11.
The weekly chart for Oracle
The weekly chart for Oracle is positive but overbought, with the stock above its five-week modified moving average of $48.27. The stock is above its 200-week simple moving average of $48.28, which is the "reversion to the mean," last tested during the week of June 22, when the average was $42.76. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 84.98 versus 86.55 on Sept. 7, with both readings above the overbought threshold of 80.00.
Given these charts and analysis, investors should buy Oracle shares on weakness to my quarterly and monthly pivots at $48.40 and $48.12, respectively, and reduce holdings on strength to my annual risky level of $51.70. (For more, see: What Drives Oracle Stock Prices?)