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Technical View - ORCL

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Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

Oracle (ORCL:NASD) has, or will likely soon, trace out an impulse wave off the January 16th high at $15.03, suggesting that, in the least a much larger degree correction off the January highs is underway that will eventually likely put in substantially lower lows than the recent $10.85 low.

It is more probable that the major downtrend that established itself from the January 2000 peak to the June 2002 low has now resumed and could carry prices below the 2002 lows. That remains speculation at this point so we will continue to focus on a shorter time frame, but the most confident observation we can make is that the correction from the January highs is far from complete. Just how low it takes ORCL eventually remains to be seen. For now, the January peak registered important daily momentum divergences against previous peaks as well as registering two important daily and one important weekly Demark trend exhaustion indicators. Additionally, the bounce from the 2002 lows was corrective (overlapping) and seemed to trace out a double zig-zag (labeled W-X-Y) though admittedly that interpretation is open to debate. The most important aspect of the move off the 2002 lows however, is that it is overlapped and therefore corrective.

Two possible scenarios present themselves at this juncture: since a 5th wave down from January has ended on 6/3/04 or will shortly end with another new swing low to the $10.80 area, a bounce may occur as ORCL corrects the 24 weeks and nearly 30% decline that has taken place since January. Fibonacci resistance is in the $12.45-$13.45 area (15-25% gains from a potential $10.80 low) and prices could take upwards of 2-3 months to get there.

Once we can confidently identify a corrective move to that Fibonacci resistance, the next opportunity will present itself: a move lower for the next impulse wave down toward potentially $8.75 or so. There is lots of time and potential price action between here and that level so we'll take it one day at a time to assess whether this larger call is playing out.

The very short term has prices moving impulsively lower from the 6/15 highs. If a 5th wave low has already formed on 6/3, then this move will be held by Fibonacci support at $11.07-$11.23. However, should ORCL move below those levels, then a final 5th wave low off the January highs is to be expected in the $10.80 area.

The immediate view then looks for a bounce soon if the $11.07-$11.23 level holds prices in a three-wave pullback from the 6/15 highs OR after a full 5 waves have developed off the 6/15 highs and registered new swing lows beneath $10.85. We will keep traders updated when the technical indicators suggest action.

No positions in stocks mentioned.

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