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Trading Adobe on Earnings: Can It Hit More All-Time Highs?

Adobe is hitting all-time highs after reporting earnings. Can it continue to rally? Let's look at the technicals.

Adobe  (ADBE) - Get Report shares were slightly higher on Friday, up about 2% after reporting better-than-expected earnings.

Shares were up about 3.5% at the session high, but the stock is lacking a major push higher after the event. That said, it’s at all-time highs.

Further, shares rallied more than 13% in the 10 trading sessions leading up to earnings and also hit new highs amid that push. So it’s not as if Adobe is down in the doldrums.

In other words, some of its earnings rally was experienced before the print. 

It doesn’t help that Friday's session is pretty mixed in the overall market, likely due to some of the Federal Reserve talk a few days ago and the quadruple witch expiration on Friday.

Overall though, the company is clearly doing well. Adobe beat on earnings and revenue expectations and provided above-consensus guidance for both metrics next quarter.

The analysts certainly liked it, with a number of them raising their price targets after the quarter.

Some investors may worry that it’s too late to buy the stock. But according to one Real Money contributor, that’s not the case. Let’s look at the chart.

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Trading Adobe

Daily chart of Adobe stock.

Daily chart of Adobe stock.

Amid its aforementioned rally earlier this month, Adobe broke out over the $525 level, which had been resistance. The $525 mark can into play near the high in August and September 2020, as well as the high in April.

Shares finally cleared this mark and ran right to the 161.8% extension near $560. From there, the stock went through an orderly pullback to the 10-day moving average.

Now clearing the 161.8% extension, where could the stock go from here?

If the stock can hold up over $550, more upside could be in the cards. Ideally, holding up over the 161.8% extension would be best, but over $550 and Adobe still looks okay.

If it can clear Friday’s high and the $575 level, shares could be on the way to $600 and potentially the $608 to $612 area. In that range, investors will find a number of key extensions from various ranges over the last three quarters.

However, in the event that Adobe can't hold up over $550, we could be looking at another test of the 10-day moving average. If this measure doesn’t support the stock, a retest of the $525 breakout level may be in play.

While Adobe isn’t exploding higher, keep in mind that it is hitting new all-time highs in a tough session. Not many large-cap tech stocks can say that. Nvidia  (NVDA) - Get Report can though.

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