Shareholders of Adobe Inc. ( ADBE) and fundamental analysts are patiently waiting for the company to report their latest numbers Thursday morning. Let's review the charts and indicators before the numbers come out.
In our September 22 review of ADBE the charts were bullish and we wrote that "Traders should continue to hold longs recommended back in June. The gains are a game changer. Traders could raise stops to $619 from $525 while investors could raise stops to $599. The $724 area is our first price target and then the $810 is possible if the broad market has a year-end 'melt up'".
Traders should have been stopped out before the end of September as prices made a quick and sharp reversal to the downside.
In this updated daily bar chart of ADBE, below, we can see that prices came roaring back from early October to post new highs by late November. ADBE began to weaken in the back half of November and into December. Twice ADBE has broken below the 50-day moving average line. Trading volume has been heavier than usual in the past three weeks and this could be a shift in ownership from strong hands to weaker hands.
The daily On-Balance-Volume (OBV) line is just neutral. The trend-following Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of ADBE, below, we see a mixed to bearish alignment of price action and indicators. ADBE is in a longer-term uptrend but prices declined towards the rising 40-week moving average line in late September and prices are back down near the line again now.
I can see some lower shadows near $600 but they are not giving me a bullish "feeling" with the weakness in the OBV line and the decline in the MACD oscillator.
In this daily Point and Figure chart of ADBE, below, we can see a tentative downside price target in the $527 area.
Bottom line strategy: I have no special knowledge of what ADBE is going to report Thursday morning but the charts and indicators are not bullish. I would stand aside for now.
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