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Re: ADBE - Caution!
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Monday, September 27, 2010 5:37:22 PM
Hi, RTN! How have you been?
The BIG picture here is about $ADBE 's recent technical tumble based on severe fundamentals ills. While Adobe continues to sell its flagship business solution (CS5),
the demand within its two largest distribution pool (US and Japan) has waned
. I use Adobe's product myself, but I have to say that they are very expensive, and creative alternatives exist out there. But enough of the fundamentals.
Technically, the BIG picture I am alluding to is that $ADBE has been slipping over a soft slippery slope for quite some times. While buoyed by the rally that "lifted all boats", the predominant trend remains bearish, IMHO. This is not to say that one should not consider short-term trading positions, but connecting the dots on the map still pictures a selling pressure.
The bigger picture is that of the economy, and as I have emphasized in the other (S&P 500) charts as well as those listed on stockcharts.com public list (listed under my name: David Alcindor - shameless plug), the tide seems to revert back towards its lows, as the chart is carving out lower highs and lower lows down to its significant 50% Fib level.
The RSI remains pressured under its (RED) downtrending line, and a testing of its (GREEN) support line should be considered as the litmus test in this pivotal environment (i.e.: technical 50% Fibs, and fundamental suspension whether the economy is truly reverting or merely continuing a recessionary course).
Other significant indicators are the A/D, OBV and ChiOsc lines, whose 21-EMA continue a downward course, suggesting a broad selling pressure among all institutional factors (retail, registered holders and market makers - as per Mary Kay Austin astute definition).
In sum, the technicals in the broader indices still favor a reactive rally, rather than a reversal - And it all seems to be losing steam. This is worth mentioning here, because ADBE has benefited from this reaction, but has managed to remain tethered within the confines of predominantly bearish channels.
I would be more than happy to draw a shorter time frame, but for ths instance, I thought I should analyze the bigger trend.
So, the word here is: watch out for the bears, even though the element of surprise has already been used, as per the recent drop.
ADBE - 7-Yr., WEEKLY Chart:
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