Technical Analysis: Assessing the Bearish Setup for ARM and ORCL

The setup for bearish options strategies is being handed to traders on a silver platter. The broader market is in a clear risk-off mode, creating a favorable backdrop for downside bets on individual names like ARM and ORCL.

The major indices are in a technical bear market. Last week, both the Nasdaq and S&P 500 entered Friday down a respective 4% and 2% for the week, with the Nasdaq on pace for its worst weekly loss since last April. This isn't a one-day blip; it's a sustained downtrend, with the tech-heavy Nasdaq posting its third straight losing session. The pressure is squarely on growth stocks, which are the lifeblood of the Magnificent Seven and their peers.

Adding fuel to the fire is the U.S. Dollar Index. The DXY is showing clear bearish momentum, having already reacted off a key pivot at 97.85. That level, identified as a pullback resistance aligned with a Fibonacci retracement, has now become a ceiling. The chart suggests the index is primed for a move toward its first support at 96.44, which typically signals broader risk aversion and capital flight from dollar-denominated assets.

This risk-off sentiment has directly pressured tech stocks. The environment is ripe for bearish plays, and ARM is a prime example. The stock has been hammered, down 15.49% in the past month alone. That sharp decline is a direct result of the market's broader shift, where even strong fundamentals are being overshadowed by the dominant trend of selling pressure. For a technical trader, this confluence of a broken market structure, a weakening dollar, and severe sector-wide selling provides a clear, high-probability setup to target downside moves.

ARM: Technical Breakdown and Key Levels

ARM is in a clear downtrend, with its price action flashing multiple bearish signals. The stock broke decisively below its 20-day simple moving average at 109.84, a key trend-following level. That break confirms the shift from a neutral to a bearish bias, as the 20-day MA now acts as dynamic resistance. The stock is trading right at the lower end of its 52-week range, with a 52-week high of $183.16 and a recent low of $100.02. This puts the current price near the bottom of a massive decline, signaling extreme weakness.

Technical indicators are aligned for the downside. The MACD is in the red, with a value of -3.230, and the ADX is signaling sell pressure. The RSI sits at 47.6, neutral but not showing any bullish momentum. More importantly, the stock is testing critical support levels. The immediate floor is the 100.02 low, which is also a key Fibonacci support level. A break below that would open the door to the next major support at 97.35. On the upside, the 20-day MA at 109.84 is now a resistance zone, and the pivot point at 105.36 is a key intraday level to watch.

For a bearish trader, the risk/reward setup is defined by these levels. The recent pop higher to $115.10 shows some short-term volatility, but the overall trend is down. The key is to watch for a failure to hold above the 20-day MA or a break below the $100 support. Any move toward those targets offers a clear downside path, with the 97.35 level as the next major objective. The technicals here are straightforward: the trend is down, the momentum is bearish, and the key support levels are in play.

ORCL: Options Activity and Valuation Pressure

The technical breakdown for Oracle is being reinforced by heavy selling and a surge in bearish bets. On Thursday, the stock fell $10.30 to $136.37 on unusually high volume of 41.6 million shares. That move was accompanied by a massive spike in put options, with 606,335 puts traded-77% above average. This isn't just noise; it's a clear signal of elevated downside positioning and institutional selling pressure.

The price action tells the same story. Oracle has been in a steep downtrend, with the stock declining 23.8% over the past 30 days and a sharp 15.1% drop in the last 7 days. That recent volatility has pushed the share price down to the lower end of its trading range, testing key support levels. The 50-day moving average at $191.31 and the 200-day MA at $235.52 are now distant resistance zones, highlighting the depth of the decline.

This selling isn't happening in a vacuum. It coincides with fundamental headwinds that are pressuring sentiment. Reports of massive AI infrastructure funding needs ($45–50B) and a potential $20 billion equity program have fueled fears of dilution and financing costs. These concerns are amplified by insider sales and class-action filings, which add a layer of negative catalysts. The market's reaction is clear: even after a strong earnings beat with 14.2% revenue growth, the stock has been sold off, with analyst targets being cut and the consensus rating sitting at a cautious "Moderate Buy."

From a technical trader's view, the setup is bearish. The stock is breaking down on high volume, options activity shows concentrated bearish bets, and the fundamental backdrop is clouded by dilution fears. The key levels to watch are the recent lows around $136, with a break below that opening the path toward the next major support. The valuation picture is mixed, but in a risk-off market, the technicals and options flow are the dominant signals. For now, the supply of sellers outweighs the demand, and the trend is down.

Catalysts and Risk Management

For a defined-risk bearish play, the mechanics are clear. A bear call spread is a vertical spread that involves selling a call option at a lower strike price and buying a call at a higher strike, both with the same expiration. This structure generates a credit upfront, caps the maximum gain, and defines the risk. It's a clean way to bet on a stock staying put or declining, and it can be traded in accounts like an IRA. The key is to enter when implied volatility is high, which it likely is given the recent selling pressure.

For ARM, the primary catalyst is a break below its critical support. The stock is testing the 52-week low support near $100, specifically the Fibonacci support at 100.18. A decisive move below that level would confirm the breakdown and likely accelerate the downtrend toward the next major support at 97.35. The recent pop higher to $115.10 shows some short-term volatility, but the overall trend is down. The bear call spread would be structured to profit if the stock fails to hold above the 20-day MA at 109.84 or breaks below the $100 support.

For ORCL, the primary risk is a reversal in the broader market or a positive earnings surprise. The stock has been hammered, down 23.8% over the past 30 days, and Thursday's sell-off to $136.37 on high volume was accompanied by a surge in put options. This heavy selling pressure is the current catalyst. However, if the market sentiment shifts back to risk-on or Oracle delivers a beat on its next earnings, the bearish thesis could quickly erode. The trade is defined by the technical breakdown and options flow, but it remains exposed to a broader market reversal or a fundamental surprise.

The Bear Call Spread Setups: Execution and Targets

For a defined-risk bearish play, the bear call spread is a clean structure. It involves selling a call option at a lower strike price and buying a call at a higher strike, both with the same expiration. This generates a credit upfront, caps the maximum gain, and defines the risk. It's a trade that can be executed in accounts like an IRA. The key is to enter when implied volatility is high, which it likely is given the recent selling pressure.

For ARM, the setup is straightforward. The stock is testing critical support near $100, with the 20-day MA at 109.84 now acting as dynamic resistance. A bear call spread would be structured to profit if the stock fails to hold above that 20-day MA or breaks below the $100 support. The primary risk is a break above the 20-day MA, which would signal a trend reversal. The trade would be defined by these key levels.

For ORCL, the primary risk is a reversal in the broader market or a positive earnings surprise. The stock has been hammered, down 23.8% over the past 30 days, and Thursday's sell-off to $136.37 on high volume was accompanied by a surge in put options. This heavy selling pressure is the current catalyst. However, if the market sentiment shifts back to risk-on or Oracle delivers a beat on its next earnings, the bearish thesis could quickly erode. The trade is defined by the technical breakdown and options flow, but it remains exposed to a broader market reversal or a fundamental surprise.

The bottom line is that both trades are defined by clear technical levels and high implied volatility. For ARM, the credit received would be based on the spread between the sold and bought call strikes, with the maximum gain capped at that credit. For ORCL, the same structure applies, but the trader must monitor the broader market and any upcoming catalysts that could invalidate the bearish setup.