Adobe: Walk Softly and Carry a Big Stock

 | Jun 19, 2017 | 2:06 PM EDT
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We noted recently that Action Alerts PLUS holding Adobe Systems (ADBE) looked vulnerable and prices have corrected and then bounced. The bounces are encountering selling above $140. We can also see on a daily chart that prices are testing the rising 50-day moving average line.

Drilling down into the latest charts and indicators on ADBE today, we are finding more reasons to take a go-slow posture on new longs. Let's look...

In this daily bar chart of ADBE, above, we can see the rising 50-day moving average line was tested last week. The rising 200-day moving average line is below the market, maybe too far below. The daily On-Balance-Volume (OBV) line has been weakening this month and suggests that sellers of ADBE have been more aggressive. The Moving Average Convergence Divergence (MACD) has turned lower after crossing for a take-profits sell signal. Overall, the daily chart looks like it could weaken.

In this weekly chart of ADBE, above, we can see prices are above the rising 40-week moving average line. The weekly OBV line has become stalled the past two months and the weekly MACD oscillator is close to crossing to a take-profits sell signal.

In this Point and Figure chart of ADBE, above, we can see the price action since May shows both up columns (X's) and down columns (O's). A decline back to $136.63 should create another down column of O's. This chart also shows the $126 area was a price target that was met.

Bottom line: A close below $134 on ADBE looks like it will weaken the picture, while it will probably take a close above $145 to strengthen the chart.

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