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5 Facebook Sympathy Trades From the Tech Sector

Adobe Systems

The exact opposite pattern -- a descending triangle -- is forming in shares of Adobe Systems (ADBE - Get Report). Adobe had been rallying hard for most of 2012, pushing the stock 14.5% higher since the first trading day of the new year, but the technical pattern in shares right now points to a reversal in that bull run.

Adobe currently has horizontal support at $32 and downtrending resistance has been in place since late March. The fact that Adobe has been able to catch a bid at $32 means that there are big implications if the stock can't bounce on another test of that level. That's why a break below that $32 support level makes Adobe a short candidate.

>>7 Stocks With Relative Strength to Beat the Market

Momentum, as measured by 14-day RSI, adds some confirmation to the downside setup -- it's been in a downtrend since January. Because momentum is a leading indicator of price, an RSI downtrend greatly increases the downside risks in ADBE.

Still, I'd strongly recommend sitting on the sidelines until a sustained break below $32. After that, I'd recommend a protective stop at the 50-day moving average.

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SYM TRADE IT LAST %CHG
ADBE $80.13 1.50%
FB $79.51 -1.10%
GOOG $562.15 1.20%
MSFT $43.87 -0.42%
STX $61.08 0.66%

Markets

DOW 18,190.72 -23.70 -0.13%
S&P 500 2,109.74 -1.00 -0.05%
NASDAQ 4,982.1270 -5.7630 -0.12%

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