Skeleton has reached a new high in history! Technical indicators hint at a major signal? （2024.06.12）

Hello everyone, this week's Tech Tracking analyzes the world's leading enterprise software and cloud computing services companies — Oracle$Oracle(ORCL.US)$.

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Hot Spot Events

On Wednesday, June 12, 2024, Oracle stock price surged by more than 13% to hit a new all-time high! Previously, the company's Q4 financial results report fell short of Wall Street's expectations, but the announcement of an agreement with Google and OpenAI for cloud computing services and forecast the new fiscal year will deliver double-digit revenue growth has excited investors.

Data showed that Oracle Q4 revenue (ended May 31, 2024) was $142.9 billion, up 3.3% year-on-year, short of expectations of $145.5 billion; adjusted earnings per share (EPS) of $1.63, expected at $1.65.

Despite revenue growth hitting a three-year low, Oracle's remaining obligations (RPO) amount grew 44 percent year-on-year to $980 billion, far above analyst estimates of $850 billion. A measure of company's unconfirmed contract revenue, RPO is a forward-looking metric closely watched by cloud-computing software services companies that use subscription fees to help investors understand the company's future revenue and business prospects.

Oracle said that the above RPO is largely related to artificial intelligence (AI) training, which is currently hot in the tech scene, and the company expects revenue growth in the new fiscal year to reach double digits, which is 8.6% higher than analysts expected.

Shares rallied on Wednesday, pushing Oracle's year-over-year gain to 34%. Such a strong performance has caught the eye of other large cloud computing software providers. Large cloud computing software providers are currently in a slow contract signing dilemma as tech companies tighten spending on software and divert some of their funds to AI projects.

On the other hand, after the share price hit a new high, the valuation of Oracle is also more of a concern for investors. According to FactSet data, Oracle's current expected market earnings margin (PE) has exceeded 22 times. While this valuation is relatively low compared to other cloud computing companies, it is the highest level for Oracle in nearly 20 years, up 40% from its average valuation over the past five years.

Technical analysis

Trend analysis:

THE PERIPHERAL CHART SHOWS THAT THE OVERALL PRICE OF ORCHARD HAS NOT CHANGED MUCH OVER THE PAST 12 MONTHS, ROUGHLY FORMING AN UPWARD TRIANGLE PATTERN UNTIL THE STOCK PRICE RALLIED 13% BEFORE BREAKING THROUGH THE TRIANGLE. And before the bullish triangle appeared, the share price doubled in less than a year from a low of $59.14 in September 2022.

The daily chart is even more interesting, since the recent financial reports have seen a sharp rise or fall in Oracle stock prices. However, over the next period of time, whether stock prices bounce back after a big rise or rebound after a big fall, this has led to a situation where the overall trend has not risen or fallen in recent years.

Indicator Interpretation:

Oracle is a clearly report-driven stock. From a trading perspective, trading volumes tend to spike to phased highs along with the recent stock price turbulence, making it easy for the Relative Weak Index (RSI) indicator on the daily chart to fall into overbought (>70) or oversold (<30) zones. In this regard, once the RSI drops back from the overbought region to below 70, it may be a potential sell time.

Direction of attention:

Currently, the Oracle stock price is at an all-time high with no resistance above, while the potential support level below is near $126, the triangular breakout on the chart. In the short term, investors can keep a close eye on momentum indicators such as the RSI to capture opportunities for a possible fall in the share price.

This content discusses technical analysis, and other approaches, including fundamental analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect the expected results.

All investments involve risk, including the potential loss of principal, which cannot guarantee the success of any investment strategy.