It's 'off to the races' for Oracle if it can break this level, says technician

High-growth tech stocks like Twitter and Facebook have stalled, but legacy tech names are surging.

Stocks like Apple, Oracle, Microsoft, Cisco and IBM have all rocketed higher this quarter.

One of those names looks set for an even bigger breakout, according to JC O'Hara, chief market technician at MKM Partners.

"If you look at Oracle, the stock was up in 2000 and it came crashing down. It was trading at $7 and it took years and years and years to move back to retest those 2000 highs," O'Hara told CNBC's "Trading Nation" on Wednesday. "When it broke above $46, which was the 2000 high, it rocketed higher."

Oracle recaptured $46 in late 2014, but did not break solidly higher until mid-2017. It is currently 12 percent higher than that level, closing Wednesday at $51.63.

"We really believe if we get above $53, this thing is off to the races and we have another 15 to 20 percent baked into it," said O'Hara.

Oracle last touched $53 in March, marking an all-time high. It needs to rally less than 3 percent to get back to that level.

It's a similar story with Cisco, says O'Hara.

"We broke above long-term resistance at $35 and again look what happened on the chart. When we broke above, it rocketed higher," he said. "While it's way below the 2000 highs at $80, we think the stock could be at $60 in the short term."

A move to $60 represents a 25 percent rally from Wednesday's closing of $48.41. It has not touched $60 since September 2000.

Chad Morganlander, portfolio manager at Washington Crossing Advisors, is also bullish on these two stocks, seeing them as solid value plays that can deliver steady growth over the next few years.

"Oracle as well as Cisco Systems could do quite well in the next 18 months regardless of how technology does overall as a sector," Morganlander said on "Trading Nation" on Wednesday. "Huge amounts of cash on the balance sheet, very little debt, rising dividends — companies that could pay you over the course of the next three to five years — both of these companies have a nice fundamentals setup."

Oracle has added 17 percent over the past three months, while Cisco has gained 14 percent. Both have topped the information technology sector's 8 percent rise.

Disclosure: Washington Crossing Advisors has a position in Oracle and Cisco.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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