Oracle Stock Chart Analysis (NYSE: ORCL)

At first glance, Oracle’s (NYSE: ORCL) chart looks great. There doesn’t seem to be any resistance ahead for the stock. In the past year, Oracle stock is up almost 23% compared to 13.8% for the S&P. The stock struggled throughout most of 2013 and had a couple of big downward gaps on earnings reports in March and June. The second gap down helped create a trendline that shows the strong upward movement since last summer.
Just looking at the weekly chart, it would appear that the biggest concern would be that the 10-week RSI has now entered overbought territory. If you look back over the past three and half years, each time the RSI went above the 70 level, the stock saw a pretty significant pullback.
The lone resistance point comes in to play when you look at the monthly chart and you see the all-time high at $44.20 that was set back in September 2000. That high came at the peak of the technology bubble when investors were willing to buy almost any stock that was in the tech sector.
The $44.20 level could serve as resistance for the stock as it could have a psychological effect on investors. The other problem is that the stock has entered overbought territory based on the 10-month RSI. The RSI broached the 70 level for only the fourth time in the past 13 years and in each previous instance, the stock dropped at least 10%.
Oracle stock faces more than just the technical resistance in the coming weeks. The sentiment toward the stock is pretty bullishly skewed and that could hurt the stock as well. There is hardly any short interest to speak of with the short-interest ratio coming in at a paltry 1.7. The put/call ratio is also low at 0.55. That is among the lowest 4% of readings over the past year. The analyst ratings are the only sentiment indicator among the three that is showing any sense of skepticism with 21 “buy” ratings, 18 “hold” ratings and three “sell” ratings. I would call this a moderate amount of skepticism.
I would look to short Oracle stock between the present level and the all-time high ($44.20) with a stop-loss point at the $45 level. This will give the trade a little room in case there is a false breakout. Your target should be a move down to $37 at the very least. Based on the four previous instances where the 10-month RSI hit 70, I think a decline in the 20-30% range is very realistic.

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