O.E.,
ORCL is now over 45% off its high, set only 2 1/2 months ago. It is now significantly ahead of (i.e., below) all its major moving averages (10, 20, 50 dma), which historically it has never strayed far from for very long. Furthermore, it is extremely oversold at this point, and stochastics suggest the stock may be starting to correct back to its moving averages:
askresearch.com
ORCL has had quite a run to the downside, the selloff has been overdone, and now it is due for a rest. Over half a billion shares have been involved in the selloff. I can't imagine where selling pressure of a similar magnitude will come from-----the big investors have all left, so there's few left who can generate anything like that kind of selling pressure. Furthermore, the "overvaluation" has been thoroughly beaten out of ORCL, and it now sports a P/E of 23, very nearly placing it in the category of a value stock. And, because of this valuation, it is not likely that ORCL has the kind of downside left in it that I would like to see in a short position.
I think it will consolidate here, or more likely, correct back up to its moving averages. After that, the downtrend could well continue, though probably at a slower pace. But alternatively it could trade sideways indefinitely, never again revisiting the lows just set. Therefore, I wouldn't short it here for sure, although if there were a significant correction to the area of its 50 day MA (i.e., 33 to 35 area), I would consider a short entry at that point, after first seeing evidence of technical and chart weakness, indicating a probable resumption of the downtrend.
In short, just as I wouldn't chase a momentum stock in an uptrend which had gotten way ahead of all its moving averages, I think it unwise to chase ORCL to the downside.
All IMHO.
WS |
