Adobe Systems ( ADBE) is scheduled to report quarterly numbers later Thursday. Let's check the charts and indicators to see if we need to stay on the sidelines or get involved.
In this daily bar chart of ADBE, below, we can see the past 12 months of price history. Most of the history has been negative or bearish. Prices gapped lower in September and made a low, and the bounce or recovery off that low has been very timid.
ADBE is now trading below the declining 200-day moving average line, but above the rising 50-day line. Trading volume spiked sharply when ADBE gapped lower, but the pace of trading slowed from mid-September as prices advanced. Rising prices and shrinking volume is not a bullish combination. The On-Balance-Volume (OBV) line has declined the past year as traders remain more aggressive sellers. The Moving Average Convergence Divergence (MACD) oscillator is pointed down towards the zero-line.
In this weekly Japanese candlestick chart of ADBE, below, I see a bearish setup. In October and November I see a number of upper shadows telling me that traders are rejecting the highs. This is another way of saying the path of least resistance is probably down. The weekly OBV line shows a longer-term decline. The MACD oscillator has crossed to a cover-shorts buy signal but remains a long way from an outright-buy message.
In this daily Point and Figure chart of ADBE, below, we can see an upside price target in the $399 area but a trade at $320 or lower is likely to weaken this chart.
In this weekly Point and Figure chart of ADBE, below, we can see a price target in the $427 area.
Bottom line strategy: I have no special knowledge of what ADBE will tell shareholders later today, but in the weak stock market environment I would avoid the long side for now.
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The charts of this fund are giving off a positive glow.
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