Swing trading gravitates toward shorter-term trades. So why did we hold Oracle stock for nearly two months? When a stock rises that nicely, we will sometimes extend our holding period while the trend persists.
Oracle Stock Parties Like It's 1999
Oracle was one of those great model book stocks of the 1990s that produced phenomenal returns. But with two decades of similar performance to the S&P 500, there wasn't much reason to take the individual stock risk. Why buy if you are unlikely to get outperformance. The AI boom brought Oracle back to its winning ways.
In its last earnings report, Oracle popped to a previous line of resistance from December (1). We often wait after an earnings gap to see how a stock digests the gains. Oracle had just five days of pullback, remaining above its 10-day line. When it broke above the short downtrend, we added it to SwingTrader (2).
We started Oracle as a half position to get our foothold. When it gapped up to highs, we added another half to make it a full position (3). It was a little rough due to the reversal from highs on our add, but the stock held the gap and didn't continue to weaken.
Massaging The Position
Not only did Oracle hold the gap, it started to really accelerate over the next few days. With a 10% profit from our entry and 9% profit from our average cost, it made sense to protect the profit while we had it. That led us to scale back to a half position to lock in some profit from our last add (4).
As Oracle continued higher, it was one of those rare stocks that held its trend above its 10-day line. Even brief touches of the line (5), quickly found support and a bounce. Still, as the position got extended, the downside reversal at the end of July was hard to ignore (6). Especially since so many stocks came under fire that day along with the major market indexes.
We were already down to roughly 30% invested after the downside reversal and lightened up even more when stocks fell hard the next day (7). We lightened up on the position in Oracle but still kept a quarter as it was one of our better performers.
Character Change Leads To Exit
Because Oracle was still holding up well, we took a shot to boost it back to a half position on an upside reversal bouncing at the 21-day line (8). But the character was different now. Oracle was flattening out and not trending like it was. Rather than overstay our welcome, we exited the position when it undercut its recent lows (9). It was a longer hold, but Oracle's trend justified the decision. Once it changed character, we adjusted too.
More details on past trades are accessible to subscribers and trialists to SwingTrader. Free trials are available. Follow Nielsen on X, formerly known as Twitter, at @IBD_JNielsen.
