Adobe Inc. (ADBE) will report earnings on Wednesday and Jim Cramer told Mad Money viewers Friday night that the company was part of his game plan for the week. Let's check out the charts and indicators of ADBE to see if traders are positioned for bullish or bearish news.
In this daily bar chart of ADBE, below, we can see that prices made a high in late August/early September. Prices have worked sideways to lower but notice how the On-Balance-Volume (OBV) line has begun to crawl higher from November? This is a clue that traders are becoming more aggressive buyers ahead of earnings.
The slope of the 50-day moving average line is flat and the 200-day moving average line is cresting.
The Moving Average Convergence Divergence (MACD) oscillator crossed upwards last month for a cover shorts buy signal and we could see an outright buy signal this month.
In this weekly bar chart of ADBE, below, we can see a mixed picture. Prices have made good gains the past three years. ADBE is above the rising 40-week moving average line.
The weekly OBV line shows a peak back in March when the board market bottomed. Prices have doubled but the OBV line has not confirmed the gains. A bit odd.
The MACD oscillator is in a take profits sell mode.
In this daily Point and Figure chart of ADBE, below, we can see a potential upside price target in the $563 area.
Bottom line strategy: While we have a headline that ADBE could go either way I would give a slight edge to the bulls. If you are long or want to be long ahead of earnings on Wednesday I would recommend a stop at $450. A decline to $450 would weaken the daily chart.
