For his "Executive Decision" segment of Mad Money Thursday night, Jim Cramer spoke with Shantanu Narayen, chairman, president and CEO of Adobe Inc. (ADBE) . ADBE is a creative cloud software provider that just posted a 2 cents-a-share earnings beat with strong guidance.
The company's recent acquisitions of both Magento and Marketo are off to a great start, with revenues exceeding expectations. These products will help Adobe customers go from leads to revenue faster than ever before, Narayen said, in both the business to business and business to consumer markets.
Cramer reiterated his recommendation of ADBE last night and it is our Real Money Stock of the Day. So much for the fundamental background, but let's look at the charts and indicators.
In the daily bar chart of ADBE, below, we can see that prices opened with a gap lower Friday morning and the stock is under pressure. For a couple weeks ADBE was holding above the rising 200-day moving average line and the declining 50-day line. Unfortunately, prices quickly reversed direction lower. The 50-day line looks like it will soon close below the 200-day line for what is commonly called a death cross (a.k.a. a sell signal using moving averages).
The daily On-Balance-Volume (OBV) line moved up to a new high the past few weeks as ADBE rebounded from around $210 in late November. The rise in the OBV line is good news and bad news. The good news was that buyers of ADBE were more aggressive and the bad news is that buyers were more aggressive. These aggressive buyers could feel the pressure to sell ADBE as it looks like is has started a new move lower.
The Moving Average Convergence Divergence (MACD) oscillator is turning down again for a new sell signal.
In this weekly bar chart of ADBE, below, we can see that prices are below the rising 40-week moving average line. The weekly OBV line is pointed lower and the MACD is bearish and close to the zero line.
In this Point and Figure chart of ADBE, below, we can see a tentative downside price projection or objective of $210.85.
Bottom-line strategy: It looks like ADBE could retest its November low around $210. If it holds then ADBE might try the upside from there but if it fails then the door is open for a bigger decline.