ORCL (Oracle) could turn out to be Ebenezer Scrooge in the midst of all the joy brought on by today’s 3% move higher. Just before Christmas, today’s market renewed the Bull’s hopes for a more positive 2012 than the year we’re completing. If ORCL is typical, many stocks look like they spent this year’s flat market to form some really huge, compelling and emerging patterns.
What makes ORCL today’s Scrooge is that it fell 9% to 26.54 in after-hours trading. According to Business Insider, “The company just blew its latest quarter: earnings came in at $0.54 per share (non-GAAP) on $8.79 billion in revenue. Wall Street was expecting $0.57 on $9.23 billion.” What a difference 3 pennies can make! It almost doesn’t matter what the company says, according to the Herd on Wall Street, “this looks a lot like a company milking its existing cash cows without signing up a lot of new customers or building new high growth businesses.”
The chart clearly shows an emerging change in Wall Street’s perception of ORCL:
The stock climbed in a clear, yet not-so-neat ascending channel since it touched bottom at the end of the Tech Bubble Crash in 2002. However, this year was one of the few instances when a recent high was lower than the previous one
making for a descending resistance trendline. Interestingly, the after-hours close of 26.54 almost exactly touched a horizontal supporting trendline stretching back to early 2010. (One can also easily argue that the supporting trendline slopes slightly downward making the prospective low at around 24.) Let’s zoom in for a closer look:
It’s too early to tell whether the congestion this past year will be a consolidation pattern (e.g., a wedge) or a reversal (e.g., a double top) but what is certain is that it could be some time before ORCL again approaches the 30-35 area. Unfortunately for the market, ORCL isn’t a unique case or exception. As a matter of fact, it’s unfortunately all too common (see, for example, AMZN, ARUN, RHT, TIBX).