Oracle has a strong long-term thesis due to its $664B RPO backlog, but faces short-term consolidation as it digests recent earnings without an immediate catalyst for upside.

Uh Brett says, "Oracle and Adobe, let's see those premiums at the open." Two of the big earnings reports. Oracle Restoration Hardware gapping up.

The first one is probably the most obvious. It is indeed Oracle, ticker OCL. It rose 6.97% in the pre-market on Friday after it reported better than expected first quarter financial results and raised its fiscal 2027 adjusted EPS guidance.

Now, first stock that I want to take a look at here is actually going to be Oracle. And we'll start with the chart because Oracle's at a spot here. Um, here's what it looks like on the on the daily chart.

And actually, I wanted to extend this trend line out a little bit. There we go. Look at that. We're basically coming back into that trend line and to the 20-day moving average.

The current price here, 162. The support really looks like it's at a pretty thick area from 148 to 150. So, we'll see if that ends up holding here. We do have the 200 day only six points higher than where we're at right now. 167.82. Your 500 days at 18578.

Uh we're going to talk about Oracle's report here. And I think the biggest note today came from the conference call. I actually went through that transcript and I pulled something out about the RPOS which we're going to talk about here.

Oracle beats revenue and EPS estimates and then raises its fiscal 2027 EPS guidance and obviously the stock is responding positively to that. Oracle Corporation, ticker OCL, shares are trading higher Friday uh after the company reported better than expected first quarter results on Thursday after the market closed and raised its fiscal year 2027 adjusted earnings per share guidance above analyst estimates.

Oracle reported adjusted earnings per share of 192. This beat the consensus estimate of 174. And in addition, the company reported revenue of 19.3 billion, beating the consensus estimate of 19.14 billion.

Total revenue was up 30% year-over-year. Total cloud revenue reached a record up 62% with cloud infrastructure oras revenue up 121% and cloud applications or SAS revenue up 10%.

Remaining performance obligations or RPOS grew by 209 billion year-over-year to a whopping 664 billion. Oracle raised its fiscal year 2027 adjusted earnings per share guidance from 805 to 810 versus the consensus estimate of 807.

The company now expects fiscal year 2027 revenue of more than 90 billion versus the consensus estimate of 89.789 billion. For the second quarter, Oracle sees adjusted earnings per share of 185 to 193.

That was verse the consensus of 189 and sees sales of 20.87 87 billion to 21.51 billion. That was versed a consensus of 21.21 billion.

Now on the Q1 fiscal year 2027 call, management said Oracle now expects roughly half of its 664 billion RPO to convert to revenue over the next 36 months. That's up modestly from the Q4 20 fiscal year 2026 framing which was 12% in year 1 plus 34% in years 2 through three for a total of about 46% within 36 months.

So the conversion pace nudged up rather than accelerating dramatically. And this is consistent with last quarter's comment that both figures were quote expected to accelerate. Indeed they did.

Two other relevant notes from the call. Management reiterated that most of the new AI contracts signed this quarter, the 30 billion that was added to RPO, won't require incremental capital from Oracle and won't hit revenue until fiscal 2028 or later, meaning a meaningful chunk of the backlog is backloaded well past the 36-month window.

And some of the quarter's RPO growth reportedly came through prepay arrangements or bring your own hardware deal structures which are the most capital light for Oracle than fully self-funded builds.

A modestly favorable shift in how the backlog converts if it holds up.

So really the question here for me on Oracle, are we at enough of a support level? Has it sold off enough for this to now be viable? It sure seems based on the report that they're saying nothing is slowing down.

AI continues to rage and we have $664 billion worth of commitments. We can't possibly build the data centers fast enough. So, it sure seems to me that this stock is ripe for a run.

And I think that looking at the September seasonality into October, this is definitely a stock that you want to have on your watch list. Either whether it be for day trading, short-term trading, or a long-term investment.

Keep your eye on Oracle, especially after that report.

SG, we actually talked a little bit about Oracle earlier, so you can rewind for that. We will cover Oracle here, but I did want to get a couple of other stocks that folks were asking about uh in here.

I was gonna say Oracle here. This is what one of our big earnings movers that looks like this is trying to break out of the pre-market structure and go higher. We did have an impulse move that took us up to 167 and a half or thereabouts. So, we'll see if it ends up taking that out.

Yeah, Oracle um you got uh you got resistance at that 200 day SMA 170 area. Um I mean tech calls. I I was going to say Oracle, but it's a ton of names. Nvidia, Oracle, Apple, uh TSM, Intel, MBIS calls on all of them. Oracle leading the way.

Yeah, I mean coming back in with with Oracle. I mean, I think that kind of give gave a little bit of a revitalization to the uh the tech names. Uh but I think this uh this I don't know we're going to see a move through the 200 day SMA just yet, but it could be soon. Could be soon.

NASDAQ moving lower here perhaps on the back of that oracle fade that we saw right out of the open.

Oracle is bouncing. Maybe that even makes its way back to the VWAP here.

Oracle still trying to bounce too. and that would be helped by a bounce in some of these other tech names like Oracle that we're talking about.

Yeah, I get the sense that this is off of uh Oracle's earnings.

No, I did not miss it. Um, Oracle wants to get to its VWAP. Uh, it's it looked like it was trying to bounce there, but that has kind of slowed down now on Oracle. We'll see if it does get to the VWAP. Here's what the Oracle chart looks like.

and Marie saying Dell going to get toy here and Libertus said Oracle third test of the lows. Oracle is hanging out down here by the lows.

I still have to do some work on uh Oracle because I want to get a bit of a timeline going on this RPO uh converting to uh revenue. Uh I think that's going to be uh a very very big reason to to own uh Oracle uh in the future.

Um so I'm going to I'm going to do some work on that.

Uh actually seeing now Oracle calls and puts. I'm seeing a mix there. This was calls early, but it looks like it's both at the moment.

that was that was a nasty shakeout on those calls earlier. That looks like that's going.

Oracle gave everything back. Oracle was on the bot list to trade there, but um no go. And Oracle coming back in 152.

Oracle Drop is an example why sometimes it's better to sell after the earnings pop. but um you know I'm kind of wondering if Oracle Leaps makes sense given their uh massive RPO over the next several years, which I talked about by the way in the A block on Oracle.

Now, on the on the call, management said Oracle now expects roughly half of its $664 billion of RPO, which is remaining performance obligations, to convert to revenue over the next 36 months.

This is up modestly from the last earnings sprint where they said 12% in one year plus 34% over the next two to three years for about 46% in 36 months. So the conversion pace nudged up and the RPOS themselves grew.

So um the options guys are pretty active into December. There's a a a fair bit of motion there. Um, the put wall is currently at $120. If a chart has had upward pressure into earnings and it spikes through the earnings flow and then gives it all back, that doesn't feel warm and cozy to me.

And so the thought is that this move upward that really popped off at the top of the motion is essentially um short covering. listen, if you like Oracle and you go, listen, they're going to pull out of this funk that they're in.

And they also said that their spend was going to decline into that space. So there are a lot of things that look good on the surface, but traders are not reacting well at the first pass.

And so the question might be, well, what's in their way? And the first thing I see is my resistance at 170. And so that number comes from my calculations that I use with the the earnings candlestick formations. and it came right into that 170 and just rejected right off of the edge.

Now, is momentum lifting? It sure is. Momentum is lifting. It's positive on the weekly, but it's still caught in this region of I just don't know if these guys are going to make it through.

The nice thing is you could say, well, I see a lot of support pressure at that 135 area. So, let's assume that the price action hobbles around here, holds the prior earnings low at this 150 zone, and it continues to rise.

That's our first premise, right? We look at the prior earnings event. That's two ago. So we'll go from this earnings to the earnings above it. So that's the top at about 200. Big fat round number looks pretty interesting.

You can say hey I'm bullish Oracle as you know last time we spoke I said listen this is going to be sideways based on the calculations. Um this is my iron condor. sold it at $2.

It's now a buck 27. So, I'm gonna leave it until it's about 80 cents and then I'm going to cover it. So, that one's holding.

If you say to yourself, listen, this has room to run, you have to give it a chance to digest in the motion. And so the butterfly in December, yes, it's far away, friends, but the butterfly in December, 150, 170, 190.

It's $3 right now, but it's got a $2,000 upside. And we can see that 170 area is collecting all kinds of volume across all of the chains.

That 170 area is really starting to look very interesting in terms of upward draft. Now, could it go all the way to 200? Yes, I'm sure we'll look at Oracle again. And if it happens to run, we can always buy back the 170 and sell a 200 and build another butterfly underneath it. and that would turn it into a condor.

Okay, so that's what I would say. If you're thinking that the price action is going to move from here in short order, I just don't see it. I think they're going to digest and get super noisy, which is really, what have they done?

They moved one, two, three, four, five, six, seven weeks into earnings. Earnings came out and the catalyst was, I'll I'll see you later.

It's I suspect it's the remorseful buyers to choose uh Mark's terms that are saying, "Hey, listen. I'm going to buy this breakaway formation that looked really nice in April and I'm going to hang on to it."

And then that collapse made them go, "Oh my goodness, I just don't feel good about what's going to happen next."

Plus, we are moving into that leaky stage. Like I mentioned when we got together, was it Tuesday? I said, "Hey, listen. This is the weakest of September weeks." And true to form, it's done exactly that. And now the charts are digesting.

Really, oil is the reason that we are likely even having the kind of bounce that we're having today. It's just a refle and we've run down five days and it's just let's just take a breath.

It's Friday. Let's try to buy the market up and see what happens.

So my thought is this still has downside. If you are looking at I just heard a trade go off. If you are looking at downward pressure and you're like I see what you're saying. Maybe there's some short action. the put walls.

Well, there's 18,000 of them at 150. That's the first thing. And then there's 12,000 at 145.

Could this be a really tight, super cheap um butterfly where you can go, hey, listen, I might get a 10x here if I can get it for about 60 bucks or whatever. I think this starts to run up as the market leaks.

I I just have the suspicion that what's driving the motion is relief buying. Just people covering their shorts after a week of being short and they're going, you know what, I'm taking my cash.

No catalyst pushing us forward and the buyers are just not super enthusiastic here. They they really are not. They're treading water into the space.

Now, I still like this December butterfly. I know it's far away, but it's really great. And my iron condor literally has printed money because I said, "You know what? I don't want to get a ton, but if it leaks off, I'm going to be quite all right.

I'm going to be just fine." And that's exactly what it's done.