Oracle Corporation (ORCL) provides software applications for IT environments worldwide. Services are provided at three levels of the cloud: software, platform and infrastructure. It seems like my proprietary analytics had determined risky levels that correspond with each tier of Oracle's cloud.
The stock closed Thursday at $50.19, just above my quarterly pivot of $50.00, with a wall of risky levels extending up to $52.75. These levels now provide a challenge for the stock. The stock had a solid gain of 30.5% year to date but is 5.6% below its all-time intraday high of $53.14 set on Sept. 14.
Analysts expected Oracle to deliver earnings per share of 68 cents to 69 cents when it reported results after the closing bell on Dec. 14. The company beat this estimate, but cloud revenue disappointed. The stock ended the after-hours session at $46.88, down 6.59%. (See also: Can Oracle Win in the Cloud Space Against Amazon?)
The daily chart for Oracle
The daily chart for Oracle shows the stock above a "golden cross" since Feb. 24, when it closed at $43.17. 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 positive signal remains in play today, with the 200-day simple moving average as the key level to hold on weakness, now at $47.72. Oracle traded below this level in after-hours trading on Dec. 14, making today's trading important for the stock.
The weekly chart for Oracle
The weekly chart for Oracle is positive, with the stock above its five-week modified moving average of $49.56. The stock is well above its 200-week simple moving average at $41.72 and has been above this "reversion to the mean" since the week of Jan. 13, when the average was $38.60. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 40.20, up from 33.64 on Dec. 8. A weekly close today below $49.56 would result in a downgrade to neutral.
Given these charts and analysis, my trading strategy is to buy weakness to my quarterly and annual value levels of $43.10 and $42.03, respectively, and to reduce holdings on strength to my semiannual, annual and monthly risky levels of $51.27, $51.48 and $52.75, respectively. My quarterly pivot is $50.00. These risky levels are now the barriers in the Oracle cloud. (For more, see: How Artificial Intelligence Will Boost These 8 Stocks.)