Oracle (ORCL) has pulled back recently, which is not all that surprising with some of the downside days we have endured lately. We don't like to write in a hedged manner, but sometimes the charts and indicators do not give us clear clues. Sometimes we have a good indication but want to see a little more evidence before having a strong conviction about a trend or a trend reversal. That describes what I see with ORCL right now.
In this daily chart of ORCL, above, we can see prices are between the declining 50-day moving average line and the rising 200-day line. It is like being in no man's land. Traders were confronted with the same issue in May and June when the price of ORCL was also between the 50- and 200-day averages. Stepping back, we can see the On-Balance-Volume (OBV) line rose most of the time from a January low. Trend strength is lacking, however, with the Moving Average Convergence Divergence (MACD) oscillator with a much lower July peak than the late-March high. The MACD oscillator recently crossed below the zero line for an outright sell signal. There is some support on the chart from June when ORCL held the $39-$38 area, but this area is relatively small and doesn't look like it will stand up to some aggressive selling.
In this weekly chart of ORCL, above, we can see prices are above the rising 40-week moving average line but this line could be tested next week. The weekly OBV line is bearish, as it has been in a downtrend since the middle of 2014. The MACD oscillator just crossed to a new sell signal.
Strategy: Some people say you should trust your gut, but I like to see more evidence of whether I should sell or buy. A close below $38 on ORCL should put the bears in control so we would NOT buy this pullback. A close below $38 could start a decline to $34.