Oracle Is Fading Toward a Test of Key Support
Bloomberg News
Shares of Oracle (ORCL) - Get Report are down 1.5% this morning as the stock works on its third straight loss. Today's selloff began with a downgrade-inspired downside gap that extended the drop from last week's high to 3.25%. Oracle has stabilized near its initial November lows but has suffered considerable damage today. In the near term, the stock will likely drift lower, creating a low-risk entry opportunity for patient investors.
Oracle stalled last week just below a major resistance zone. After a powerful rebound off the October lows, a run that lifted it over 14%, the stock began to test the $40 area. Just above $41 is the March low and July high. The July high was a key turning point during the stock's flush from the June peak. Also in this area is Oracle's declining 200-day moving average. A pullback from this heavy resistance zone was likely. A downgrade today provided the catalyst.
The downside momentum in place today will carry shares lower in the near term. For investors this will set up an entry opportunity. Oracle has a very solid layer of support in place near the $38.50 area. This key zone includes the July low as well as the September high. A hold here would set the stock up well for a renewed bull run. Oracle will need solid footing underneath to mount a rally past the $41.50 area. Without a deeper pullback, a base with this strength is unlikely.
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Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.