Oracle
Oracle (ORCL) stock added 13% to its value today as investors responded positively to the company’s earnings call last night.
Initially, the stock saw selling last night as Oracle’s earnings results hit the headlines. Here’s the headline as it crossed my screen: “Oracle misses by $0.02, misses on revenues; will guide on the call.”
Shares moved slightly lower on the earnings and revenue miss, but investors held off on selling the stock heavily based on the phrase “will guide on the call,” and they were right to do so.
On the call, management announced, “In Q3 and Q4, Oracle signed the largest sales contracts in our history—driven by enormous demand for training AI large language models in the Oracle Cloud.”
Further detail on the outlook revealed, “Oracle signed over 30 AI sales contracts totaling more than $12.5 billion—including one with OpenAI to train ChatGPT in the Oracle Cloud.”
This and other information from the call fortified Oracle’s position as a leader in the AI industry, and the expectations that the company will continue its leadership in the space.
Shares of Oracle spiked to new all-time highs in today’s trading. The move constitutes a “crescendo volatility” move, causing the stock to move outside its Bollinger Bands on the same day that volume is statistically “high” and the stock reaches an oversold reading of its RSI indicator.
A similar technical situation formed in March after the company’s last earnings report.
The same conditions should be expected as we saw in March, a consolidation that eventually leads to lower prices that long-term investors will take advantage of by increasing their holdings.
Buyers looking for “value” should eye the $130 price level followed by $125. Otherwise, the stock is set to continue its rise.
Tesla
Did someone get a look in the ballot box?
Tesla (TSLA) shares reversed everything they did yesterday and just made the volatility surge I pointed out yesterday even more interesting.
If you didn’t catch it already, I walked through the charts and why Tesla looks perched to continue its bearish trend towards $100 in my latest YouTube. You can watch it by clicking here.
Today’s price action took the stock back above $175 to close right at its 20-day moving average. The move also avoided a break below the critical $170 price level. A move below that price will trigger a new round of volatility like what we saw on Tesla when it dropped 13% in six days in April.
Today’s trading volume on the stock was heavy, suggesting that the bulls are coming out to defend Tesla stock.
I don’t talk about the options market too much here, but today’s trading saw some serious volume on the June 14 $170 puts. These options expire on Friday, indicating that options traders are trading heavily on tomorrow’s shareholder vote results not faring well for Tesla stock.
Tesla’s short-term support at $170 has remained impressive, indicating that any good news from tomorrow’s vote is likely to result in a reversal higher. Remember, the volatility that the chart is forecasting can also lead shares higher.
Bulls should look to the stock’s 200-day moving average as a bullish target ($210) while Tesla bears should be eyeing $140 as a key short-term bearish target.
Broadcom
Broadcom (AVGO) just dropped their most recent earnings results after the close and the stock is on the move.
Shares are trading 10% higher after the company beat expectations on their earnings per share and revenue. In addition, the company guided the rest of their 2024 fiscal year higher.
The company’s earnings per share beat was generated by revenue growth of 43%, the best year-over-year growth in more than five years. The growth comes as the AI movement extends its reach further into the technology infrastructure industry as Broadcom provides semiconductor chips for data centers, networking, and storage, among other general applications.
Shares of Broadcom have been lagging the rest of the semiconductor sector with returns of 38% compared to more than 50% gains for one of the Semiconductor ETFs (SMH).
Broadcom’s management announced a 10-for-1 stock split as part of the earnings results. This will take the stock price from its current price, above $1,500, below $200. The move, like NVIDIA’s stock split that took place this week, will make the stock more reasonably priced for investors.
Broadcom shares hit rarified air as they add themselves to the growing list of new all-time highs with today’s news. There was a slight “buy the rumor” rally ahead of today’s earnings. This indicates that the stock may work its way lower after the initial buying.
Expect the stock to continue higher over the intermediate- and long-term outlook based on their fundamental growth.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.