Two Ways to Trade Oracle (ORCL) Stock After Earnings

Oracle Corporation (NYSE:ORCL) shares are higher by about 16% year-to-date to easily beat the market. However, ORCL stock isn’t showing nearly the steep charts and excessive buying stampede that many other large-cap tech stocks have seen in recent months.

While we can’t toss all large-cap tech stocks in one basket, Oracle stock does boast a more reasonable chart that, particularly after next week’s earnings report, ultimately could result in a good continuation move higher.

However, seeing and respecting both sides and directions is crucial to stock market success.

So below, I’m laying out my full trading plan for ORCL stock, in preparation for the company’s June 21 evening earnings report.

A reminder for those new to this column: One of my core principles when it comes to swing trading stocks (from a multiday/multiweek time frame) is that better, more reliable setups occur once a news item is out of the way.

Whether it’s earnings, a political election or an economic data point, once the news has been released and markets have voted with an initial reaction, the odds for a successful trade setup dramatically increases.

To wit, Oracle is set to report its next batch of earnings on June 21 (next week). While some traders will be looking to get ahead of this report with some quick trades, I’m actually focusing on what to do once the news is out and once ORCL makes its initial reaction.

ORCL Stock Charts
On the multiyear weekly chart, we see that Oracle shares for years have been ascending in a wide yet well-defined uptrending range. The 200-week simple moving average (red) also coincides with the lower end of the range, making it all the more important.

As a result of the year-to-date rally, ORCL stock trades roughly in the middle of this channel, but also right near its previous all time highs from 2014. If and when Oracle can overcome these previous highs around the $47 mark, look for a next leg higher into the low $50s.

On the daily chart, we see that ORCL stock was in a consolidation phase from spring of 2016 until February 2017, when it broke out of the lower blue box on the chart. By March 2017, the stock had exhausted itself again and has been trading in a new range since.

The year-to-date rally has also led to a separation of the stock’s medium-term moving averages, which now gives us well-defined areas of support to focus on. Thus, the two trades you should be looking to make are:

  • If after next week’s earnings report, Oracle stock decides to rally and break-and-hold above $46, the next logical trade is for a move toward $46.
  • Alternatively, if the stock breaks and holds below $43.70, then a mean-reversion trade lower into $41 could set up.

Either way, the key is to wait for the earnings report to be released, and wait for an initial reaction in the stock to take hold. Only then should you look to enter a trade.

In trading, patience truly is a virtue.

— Serge Berger

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Source: Investor Place



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