Oracle Corp. (ORCL) has broken out to a new high for the move up from its June low. Is Oracle in position to retest its January-March peak or is it likely to fail? Let's drill down into the charts and indicators this morning to see what strategy makes sense for the balance of the year for Oracle, which also earns a mention from Jim Cramer in his opener this morning.
In this daily bar chart of ORCL, below, we can a large sideways trading range the past 12 months. Dips to and below $45 were bought in April, May and June while rallies above $52 were sold in January and March. In June prices made a new low but the decline did not continue for long and prices quickly rebounded in July to make a new high.
Oracle now is trading above the rising 50-day simple moving average line and the flat 200-day moving average line. A bullish golden cross buy signal can be seen earlier this month as the 50-day average rose above the slower-to-react 200-day line. We can see that volume increased into the low of June, telling us that traders probably sold while investors with foresight probably bought. The daily On-Balance-Volume (OBV) line has increased the past 12 months and made new a high recently to confirm the new price high. A rising OBV line is a sign that buyers of ORCL have been more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator has turned up to a fresh outright go-long signal.
In this weekly bar chart of ORCL, below, we can see the pattern of trading over the past three years. Prices are above the flat 40-week moving average line. The weekly OBV line shows a jagged pattern of action but shows a possible turn to the upside this month. The weekly MACD oscillator crossed to a buy signal last month and remains in a bullish mode above the zero line.
In this Point and Figure chart of ORCL, below, we can see the long-term advance from the 2009 low. A rally to $54 on this chart is a breakout and opens the way for further gains to around $67.
Bottom line strategy: Traders could go long ORCL here and on available weakness. Risk a close below support or below $47. Add above $54 and look for gains in the months ahead to the mid $60s.