Short Trade Idea
Enter your short position between $179.00 (Friday’s intra-day low) and $187.92 (an intermediate horizontal resistance level).
Market Index Analysis
Oracle (NYSE:ORCL) is a member of the S&P 100 Index and the S&P 500 Index.
Both indices trade off their all-time highs, with rising bearish trading volumes and falling bullish trading volumes.
The Bull Bear Power Indicator for the S&P 500 Index is bearish and remains below its descending trendline.
Market Sentiment Analysis
Equity futures are rising this morning, and crude oil is tumbling after the US and Iran agreed to sign a peace deal, electronically, this Friday in Switzerland. This adds to the renewed bullish AI sentiment following the successful IPO of SpaceX (NASDAQ:SPCX), which surged over 19% and added another 3% in after-market hours on Friday. While a path to the end of the war will remove a significant obstacle to rising stock markets, rising macroeconomic issues remain.
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Oracle Fundamental Analysis
Oracle is among the 20 largest companies in the world, selling database software, enterprise applications, and cloud infrastructure and hardware. It is also a member of the US-based Stargate joint venture with OpenAI, SoftBank, and MGX.
So, why am I bearish on ORCL following its earnings release?
Oracle reported revenues of $19.18 billion and earnings per share of $2.11, beating expectations of $19.10 billion and $2.11, respectively. Still, its forward guidance disappointed and failed to reassure investors that its massive debt-heavy capital expenditures were paying off. I am equally worried about plans to raise another $20 billion for data center buildouts, which create cash flow concerns and risk that returns will be insufficient to finance its debt.
Metric | Value | Verdict |
P/E Ratio | 31.53 | Bearish |
P/B Ratio | 12.30 | Bearish |
PEG Ratio | 1.04 | Bullish |
Current Ratio | 1.12 | Bearish |
ROIC-WACC Ratio | Negative | Bearish |
Oracle Fundamental Analysis Snapshot
The price-to-earning (P/E) ratio of 31.53 makes ORCL an expensive stock. By comparison, the P/E ratio for the S&P 500 Index is 32.01.
The average analyst price target for ORCL is $255.38. This suggests excellent upside potential, but downside risks remain dominant.
Oracle Technical Analysis
Today’s ORCL Signal
Oracle Price Chart
The ORCL D1 chart shows price action inside a bearish price channel.
It also shows price action breaking down below its ascending Fibonacci Retracement Fan.
The Bull Bear Power Indicator is bearish with a descending trendline.
The average bullish trading volumes are higher than the average bearish trading volumes, hinting at potentially more short-term volatility.
ORCL corrected more than the S&P 500 Index, a bearish confirmation.
My ORCL Short Stock Trade
ORCL Entry Level: Between $179.00 and $187.92
ORCL Take Profit: Between $134.57 and $142.80
ORCL Stop Loss: Between $200.15 and $212.48
Risk/Reward Ratio: 2.10
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