In his first "Executive Decision" segment of Tuesday night's Mad Money program, Jim Cramer checked in with Shantanu Narayen, president and CEO at Adobe Inc. (ADBE) , the digital media and marketing software provider. Narayen said that Adobe's mission is still to help companies create content, attract customers and transact with them. He said their recent partnership with ServiceNow Inc. (NOW) was a logical fit, bringing together two great cloud platforms for a better customer experience.
When asked about their exposure to China and tariffs, Narayen noted that Adobe has minimal exposure to both and is benefiting more from the tailwinds of people everywhere creating more content than ever. That's why Adobe is also focused on education, Narayen said.
Now, let's also take a look at ADBE's charts and indicators.
In the daily bar chart of ADBE, below, we can see that prices recently pushed up above the September/October zenith but they have since retreated. Prices retreated to test the rising 50-day simple moving average line and could be what technical analysts call a "false breakout." If prices resume their uptrend and clear $290 then the breakout was not false. (Sorry for writing like a two-handed economist.)
The daily On-Balance-Volume (OBV) line shows an uptrend for the past year and a rise from late December when prices made their low. A rising OBV line tells us that buyers of ADBE have been more aggressive with heavier volume being transacted on days when the stock has closed higher.
The Moving Average Convergence Divergence (MACD) oscillator is in a bearish mode above the zero line, which means taking profits but not shorting.
In the weekly bar chart of ADBE, below, we can see that prices been in a longer-term uptrend. Patient investors should not complain about the returns/gains over the past three years. ADBE is above the rising 40-week moving average line but like all moving averages it is a lagging indicator.
The weekly OBV line has improved from its December low but it has not confirmed the new price highs made a few weeks ago with its own new highs. This is a bearish divergence and could foreshadow price weakness ahead.
The weekly MACD oscillator is rising above the zero line which is positive but it has begun to narrow and suggests that a pullback is possible.
In this Point and Figure chart of ADBE, below, we can see both an upside breakout at $279.70 and a subsequent pullback (a column of "O's"). The chart is still bullish with a potential upside price target of $313, but further price weakness could shift the pattern to become bearish.
Bottom-line strategy: The charts and indicators of ADBE are not outright bearish but there has been some weakening of the bullish case in the past two weeks. Protect long positions.
