Oracle (ORCL) has regained its footing this week. After a very volatile start to the month, the stock is showing signs of an upside breakout. Oracle finished Thursday at fresh November highs with the help of a 1.4% gain. Oracle investors should take on a more bullish view of the action as the week comes to an end.
During the Brexit selloff, Oracle stock suffered limited damage. As June began, the stock held the 200-day moving average after a steep pullback from the March highs. Two weeks later, the 200-day held again, and after the June 27 spike low, Oracle had left behind three weekly lows near this key long-term support area. The stock rallied along with the rest of the market immediately following the Brexit low, but was unable to reach new 2016 highs. After the July peak, an ominous double top was put in place.
In August, Oracle held in a very narrow range as overhead pressure near $42 intensified. As September opened, the stock was in trouble, and by mid-October, Oracle had fallen below the Brexit low. This key area, near $38, managed to hold despite the potential for a steep breakdown. The stock based near this zone for weeks until the post-election rally.
Oracle is now back above its 200-day moving average and has left behind layers of support. In the near term, Oracle bulls should consider the stock a buy on weakness. Initial support rests between $40 and $39.
On the downside, a close back below $38.70 would violate this week's low, indicating more basing is ahead. On the upside, a key hurdle is the August low near $40.60. Once this key area is cleared, Oracle will have room to run.