Adobe, on a Momentum Run-Up Since July 2012, Is In Reach of a New High

Adobe Systems' stock has zoomed above the clouds after four consecutive positive quarterly earnings reports. The shares' recent performance suggests Tuesday's earnings report could bring another boost.
By Richard Suttmeier ,

NEW YORK (TheStreet) -- The diversified software company Adobe Systems (ADBE) - Get Report, known for its digital media, marketing and publishing products including Photoshop, has been focusing its Creative Cloud services on these applications. The success of this strategy has resulted in four consecutive better-than-expected quarterly earnings reports. 

A fifth-in-a-row positive earnings report should have the stock zooming above the clouds to another all-time high. Daily and weekly technical charts suggest the company will keep the string going when it reports earnings on Tuesday.

Some analysts say that the San Jose, Calif.-based company needs to show stronger-than-expected growth in user subscriptions to Adobe Creative Cloud products -- more than than 550,000 subscribers and as many as 600,000 to justify continued upward momentum for the stock. The company also has a cloud product for marketers.

Analysts expect Adobe to report earnings of 27 cents a share for the quarter that ended in February.

Here's a look at some performance measures for Adobe and key trading levels gleaned through analysis of daily and weekly charts.

Adobe's stock price, $77.62 at Friday's close, gained 21% in 2014 and has tacked on 6.8% so far in 2015. The share price on Feb. 27 set an all-time intraday high, reaching $80.30, and has slipped just 3.3% since then.

Investors wishing to buy Adobe shares after its earnings report should place a good 'til canceled limit order to purchase the stock if the price drops to $69.88, which is a key level on technical charts until the end of June.

Those who wish to book profits in their shares should place a good 'til canceled limit order to sell the stock if the price rises to $85.34, which is a key level on technical charts until the end of March.

Here's a daily chart for Adobe, graphing its stock price performance since 2013.


Courtesy of MetaStock Xenith

The daily chart for Adobe, whose share price reached $77.62 at Friday's close, shows that the stock has moved above its 200-day simple moving average (marked by the green line) in the last 24 months. That's except for a 20% correction when the stock price dipped from $73.58 on Sept. 9, 2014, to $58.51 on Oct. 15, 2014. The stock traded below its 200-day simple moving average from Oct. 9 to Oct. 24, 2014, when the average was $66.40.

This year, shares of Adobe have traded as low as $69.04 on Feb. 2, keeping the 200-day simple moving average at $69.23. The stock regained upward momentum, rallying 16% to an all-time intraday high of $80.30 on Feb. 27.

Currently Adobe shares are trading above the 50-day (reflected by the blue line) and 200-day simple moving averages at $74.29 and $71.21, respectively.

More insights can be drawn by viewing the weekly chart for Adobe's performance since 2009, below:


Courtesy of MetaStock Xenith

Adobe's weekly chart shows that the stock price has been above its 200-week simple moving average (indicated by the green line) since July 2012, when it was $29.96.

As a positive, Adobe shares are currently trading above the key weekly moving average (indicated by the red line) at $76.05, with its momentum reading rising from $76.17 on March 6 to $77.61 on Friday, March 13. This makes the weekly chart of Adobe's stock performance positive.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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