Friday, December 08, 2006

Investment Ideas - Long Term & Swing

A great swing trade Idea! The last few days ORCL has felt very bearish given the move down and the increase in volume, but when you look at the big picuture, the trend is still clearly up. Right now ORCL is sitting on the top of a $1 dollar gap which is from 16.50 to 17.50. This area should provide some support or short covering from the fall it's had. ORCL also has it's 200 day moving average which is rising rather nicely. So in my opinion the trend is still up and we need to wait for some kind of buy signal in this gap area if we are going to be a buyer. What would be a buy signal? I'd like to see a bullish reversal day closing on it's high with volume... Maybe some bad news comes out but ORCL closes on it's high...etc.. Right now I'd be on the sidelines waiting patiently to buy...but there is no buy signal as of yet.

Chart:







Also check out Level 3 Communications. I know not everyone is a Jim Cramer fan, but I bought some LVLT a while back based on his recommendation, and made $1,000 on the trade, so I'm not complaining. I bought ORCL before earnings as well and make another $1 grand on that trade as well. As for Cramer's confidence in the stock he recently had the CEO on his show to tout the company's future, which Cramer thinks is going to be a double in a year or so. Hey, I'm not saying the guy is perfect, but he's seen his share of company's fly and drown, and I'm willing to bet this company will do the trick. It's earning should be in the actual green within the next year or so. Keep it on your radar.

Level 3's (LVLT) stock has not done very well since it reported results in late October. In fact it has really been hanging down in price while the market has been rising. Market goes up, LVLT goes down, like clockwork. But some things to consider are:

Gross margins improving nicely
Customer reception of new product portfolio very solid
Indications that business will further improve
$2.2 billion a year in core revenue, growing 26% organically
Operating margins are improving

Level 3 is seeing substantial demand for its 10 gigabit products, the high-end product for telecom. Whether Level 3 gets acquired or not, fundamentals should drive this stock higher. It's building the high speed infrastructure such as fiber optics and even signed the deal with GOOGLE, to be it's backbone in the bandwidth department.

Check out 24/7 Wall Street's Article on Level 3 Here

5 comments:

Henrietta said...

great charts, great posts!

Stephen said...

Hey Cal,

Yea, ORCL is toast in the short-term. the MACD on a one-year weekly just crossed to the negative side and once the DMI follows suit the pullback will be even more dramatic. Heck, even the RSI formed a negative divergence warning investors to stay away.

Do you think it will srop back to major support near $15/share. For a promising month this is despressing to see. Oh well! Keep up the excellent analysis ;)

--
Stephen
www.jutiagroup.com

Phileo said...

Hi Cal,

Nice blog you've created here. Just curious, what was your rationale for holding ORCL thru earnings ?

Cal said...

I took Cramer's recommendation, the stock had been pumped up on the ORCL earnings, and then the stock delievered great numbers on the quarter, so I sold after-hours for a quick grand. Splendid.
-Cal

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