Adobe Systems Inc. (ADBE) was reviewed in mid-December, and we gave this advice: "Hold longs and consider adding to longs on strength. $194 is our target now and I would suggest a sell stop below $165." At the beginning of March we can see that our $194 price target has been exceeded and our sell stop was never reached. Let's see what the charts suggest now.
In this updated daily bar chart of ADBE, below, we can see that last month's "shake out" in the markets took the stock back to retest its rising 50-day moving average line. The 200-day line is still rising and is well below the market. Maybe too far below.
The daily On-Balance-Volume (OBV) line has been positive the past year but since November it has not made all that much upside progress. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line but starting to narrow toward a possible take profits sell signal.
In this weekly bar chart of ADBE, below, we have some signals that we should pay attention to. First, prices are above the rising 40-week moving average line but at one of the widest points we have seen in a while. Second, the weekly OBV line has stalled the past two months, suggesting that buyers and sellers of ADBE are more in balance. Last, the 12-week momentum study shows equal highs in November and February when prices made higher highs. This difference is a bearish divergence.
In this Point and Figure chart of ADBE, below, we can see a longer-term price target of $275 being projected. Pretty impressive but prices could correct first.
Bottom line: Some signals on the daily and the weekly chart of ADBE suggest that prices could pause or correct before we see further gains. Maybe a correction down to $190 or so before new highs are seen. Traders may want to raise stop protection to around $188 -- below the 50-day line and investors may want to use a stop below the February low of $180.