Oracle Sends Mixed Technical Signals Ahead of Earnings

Oracle Corp. (ORCL)  is scheduled to release its first-quarter results after the close of trading here on Monday, so let’s check on the charts and indicators of the computer technology giant to see what we might glean.  

In this daily bar chart of ORCL, below, we can see a mixed picture. Prices are trying to form a bottom pattern. We can see a left shoulder back in February/March and a head in June followed by a right shoulder in late August and early September. The shape seems OK but the trading volume is not supportive. Typically as a stock makes a bottom you like to see volume increase. In February we are not sure about the fundamentals improving, but months later we should have a better grasp of the situation and buyers should be more aggressive with heavier volume. That’s not the case here with ORCL.

The On-Balance-Volume (OBV) line does make a low in June but hardly shows us any improvement or shift toward more aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator has slipped back below the zero line for an outright sell signal. The slope of the 50-day moving average line is positive.

In this weekly Japanese candlestick chart of ORCL, below, we can see another mixed picture. Prices are still in a longer-term downtrend as they trade below the declining 40-week moving average line. I fail to see lower shadows to tell us that traders are rejecting the lows. On the plus side, the weekly OBV line shows us a stronger picture of buying than the daily OBV line. The MACD oscillator is below the zero line but improving. 

In this daily Point and Figure chart of ORCL, below, we can see a potential upside price target in the $99 area. 

In this second Point and Figure chart of ORCL, below, we used weekly price data. Here the chart reveals the same $99 target. 

Bottom line strategy: In our June 30 review of ORCL we said the stock was struggling to bottom. In the past two months the charts have improved but the indicators could be stronger. I would be neutral on tonight’s earnings. I don’t see a big downside risk but I also do not see an upside breakout.