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Sell
ORCL Chart Evaluation & Sell MentionGreetings, ORCL board members. My name is Tony and I am a chartist. I have been a chartist for 37 years and I worked as a broker/trader/analyst for Prudential Bache, Merrill Lynch, and Dean Witter in the 80's. I am presently retired and trade for my own account. Most of my comments will be chart oriented as I believe the charts reflect what the big-in-the-know traders are thinking and doing. As such, I follow the charts trying to get a piece of the action using charts as well as a trading approach that includes diversification, 4-1 or better risk/reward ratios based on support/resistance levels and knowledge gained over 37 years of trading. Here is my comment given on ORCL this weekend. ORCL Friday Closing Price - 32.36 ORCL is a mention I made on the message board this past week that did not reach the desired entry point and it was also a mention I gave 2 weeks ago on the message board that ended up becoming a small $50 per 100 shares loss. Nonetheless, based on the recent action a new mention with a new desired entry point is now being made. ORCL is showing an ominous double top on the weekly chart at 36.50/36.43 that has now become a strongly bearish inverted flag formation with the flagpole being the drop from 36.43 to the low seen 5 weeks ago at 31.16. The flag is the trading range seen the past 3 weeks between 31.16 and 33.95 which also coincides with a previous intra-week high at 33.81 that was seen in Oct11. The objective of the inverted flag formation if the bottom of the flag at 31.16 is broken is 28.50, which also coincides with the 200-week MA that is currently at 28.45. The clearly defined resistance and objective, in addition to the flag formation, makes this trade a high probability trade. ORCL did close in the lower half of the week's trading range but on the highs of the day on Friday, suggesting the first course of action this coming week will be to the upside but that the 33.50 high of the week will not be broken. The stock has been straddling the 200-day MA, currently at 32.50 with several trips above and below the line seen over the past 4 weeks suggesting that the pattern could continue this week. Intra-week resistance is found at 32.94 and at 33.26 and it is likely that one of those levels will stop whatever rally is seen at the beginning of the week. To the downside, ORCL shows support at 31.67, at 31.16, at 30.30 and at 29.52. Nonetheless, if the bears are able to "establish" a break of the 200-day MA, the selling should increase to the point where the $30 demilitarized zone will be at risk of breaking. The support at 29.52 is considered decent to even perhaps strong but the inverted flag formation suggests that level will be broken and a drop to the 200-week MA at 28.45 will be seen. It should be noted that the flagpole in the ORCL chart was built because of a bearish earnings report, suggesting that the support levels can be broken due to the negative fundamentals. Sales of ORCL between 32.93 and 33.28 and using a stop loss at 34.05 and having an objective of 28.50 will offer a 4-1 risk/reward ratio. My rating on the trade is 3.75 (on a scale of 1-5 with 5 being the highest). |
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