Software giant Oracle (ORCL) was raised to a fundamental "overweight" or buy by a Barclays on Tuesday. Let's check and see if the charts and indicators support this conclusion.
In this daily bar chart of ORCL, below, I can see that prices have traded sideways the past two to three months. ORCL is trading above the 50-day moving average line but the line is cresting. Prices are above the rising 200-day moving average line but this is obviously a lagging indicator. The daily trading volume shows a strong rise into the June high and then a decline as prices have corrected those gains.
The On-Balance-Volume (OBV) line shows a rise into mid-June and then a sideways move. Sometimes the OBV line leads the price action and right now the line has not broken out to a new high ahead of prices. The Moving Average Convergence Divergence (MACD) is just slightly above the zero line.
In this weekly Japanese candlestick chart of ORCL, below, I see a mixed picture. Prices are in a longer-term uptrend as they trade above the rising 40-week moving average line. The weekly trading volume is not showing me a pattern of expansion to confirm the rally. The On-Balance-Volume (OBV) line has been flat to down the past three months. The MACD oscillator may be narrowing but it is still in a corrective mode.
In this daily Point and Figure chart of ORCL, below, I can see a potential downside price target in the $101 area.
In this weekly Point and Figure chart of ORCL, below, I can see the same downside price target of $101 as shown on the daily chart above.
Bottom line strategy: Sometimes the charts and the fundamentals are on the same page and sometimes they are not. Right now I see the charts ORCL as bearish and poised for a downside correction.
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