Chart of the Week: ADBE
It’s time for our chart of the week, and we’re going to focus on Adobe Systems, ADBE is the symbol. This is a big software company that has started to turn around here. They have earnings coming out next month in September, and we think the stock is making a nice move here and could make a substantial move higher in front of earnings and through earnings in September.
This is a chart I’ve drawn out since the beginning of 2023. After a very nice sideways consolidation, where a nice base was built for about 4 1/2 months, we had a big breakout here from that base in the early part of June with a series of higher highs and higher lows.
Some indicators are bullish, some are bearish
Notice the colors of the candles have been teal or blue all the way up from the beginning of June. Even as the stock has corrected a bit in August, the candlesticks are still showing teal, which is cautiously bullish, but still bullish. When it’s light blue it’s strongly bullish based on composite indicators used for the go-no-go indicator.
Some of the other secondary indicators are still pretty bearish, because we have come down quite a bit from the beginning of August. Some of that momentum from June and July has just gone away. We see the MACD has crossed down under here. The Chaikin money flow is making lower highs and lower lows, and we’re below the zero line, but we are starting to make a move back above there. The no-sure-thing indicator is still negative.
But look at the TDI – the Trader’s Dynamic Index – which takes a look at relative strength as it relates to where the stock is with bollinger bands – it is starting to turn upwards here. We don’t have a bullish crossover as of yet.
A buy signal is coming
One thing I noticed is the similarity from back in May when we had this long consolidation here and we pulled back a bit underneath the moving averages and shot right back out. I think we’re going to get that same sort of behavior here if we do pull back below these moving averages over here. It should only last a couple of days – a couple of sessions – and then we get a poke right back up. That would be your buy signal.
How would that look on the chart? We see prices staring to come down a little bit here and bounce around a bit, maybe upwards, and then maybe back down a little bit over here and then perhaps a move right up there. So that’s how I think this is going to look – with a bounce down and a bounce right back up much like we had in the beginning of June.
Take a look at Adobe here. It’s an expensive stock – $520. We think the stock has some legs to make a run towards $600 before it’s all over.
