Potentially with the broader market having topped in 2015 based on our big picture view, the current rally from Feb 2016 low might be bounce rather than new bullish cycle suggesting the upside is limited.
With that background ADOBE could be close to completing its bullish cycle which commence from the 2011 low. The price action from 2000 high to 2011 low could be "Running Flat".
If this is correct then Adobe has been relatively strong Vs the NASDAQ Composite and it has an earnings announcement due on 17th March 2016 which could be better than market has estimated and would result in this being used for sharp mark up and spike into 100 area offering potential short opportunity.
Here is the technical summary (also shown on the chart): 1. Relative Strength with Nasdaq Composite might result in double top or price divergence with peak in 2008 and current one being formed. 2. The 238.2% fib extension of price swing from 2000 high to 2002 low = $93 and similarly, 261.8% = $101 3. The 238.2% of 2007 high to 2009 low = $98 4. On monthly chart a clear RSI divergence and MACD with likely double top (divergence in histogram) 5. Falling volume from March 2014 leading up to current top suggest the move is running out of momentum.
Conclusion: If the above technicals play out then a correction back towards lower range of the rising trend channel (on Log Scale) in the proximity of $50 area is likely. To trade this potential weakness and suggested Options Trade could be considered.
Action: Jan 2017, $50 PUT for around $0.50 (presently around 0.81 - 0.91). Either a limit order or after the earnings announcement and price reaction the order could be worked for close to $0.5.
If we have gap down then a review of the trade would be necessary.
Warning: This is my interpretation of price action using TA approach that I consider helps me the most but could be completely wrong. Therefore as always, please do your own analysis for your trade and risk management. You should follow this on Paper Trading Account till you feel confident to apply the skill to a live account.
UPDATE 18/09/2016:
The Adobe has been strong and on weekly above all major MAs on my chart but it could have topped as show on weekly chart
On daily we note price could bounce of the 50 & 100 MA towards $101 -02 when we will review in couple of weeks for new or adding to exiting trade. Here is the daily chart
DanV
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UPDATE 24th July 2016: Adobe might have formed a top or will retest $100 or make new high just above the last high before reversing.
DanV
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Initially published on 14th March 2016
Suggested trade Potential short
with Jan 2017, $50 PUT at $0.81 - $0.91 and that if there was a spike high on earnings we might get filled 0.5.
That did no happen and trade is still valid being quoted (as at 21/06/2016) $0.88 – $0.94. There is another earnings announcement after the market closes today. So any upside might get us filled around $0.85 or better
Price drop to $75 could value the options around $4.0+
Alternatively, a suggested Spread Trade (as at 21/06/2016)
Buy Jan 2017 PUT with Strike $90 &
Sell Jan 2017 PUT with Strike $80
for Cost of = $2.17 - $2.33
A fill under $2.17 would do.
A price drop $80 would value options for $5.0+
DanV
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UPDATE - 7th May 2016: Everything we see on the price chart suggest that it is in a topping zone. On weekly we are still anticipating this to be near completion of rising wedge. March Earnings announcement did form a high. Not sure if this is final high or might get slightly new higher high.
On Daily a push in to $100 could not be ruled out with suggested options now being quoted at $0.40 - $0.48. So a fill around $0.40 or better is now very likely. Here is a daily chart
DanV
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UPDATE 4th April 2016: Adobe have not had much of follow though tom the downside and if drifting up with the rest of the market. it is possible that it could hit $100 as Friday's close was $95.16. Short term RSI could form divergence with price. Otherwise nothing has changed. Therefore still expecting suggested option to fill at $0.5 or better (may be $0.4). At present it is showing $0.34 - $0.53.
DanV
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Adobe's earning announcement were positive as anticipated and has so far spiked into $98 (not impressive enough to take to to $110). Remains to be seen how far it will push over early next week. It might struggle at $100 as a round number specially if the broader markets begins to decline. The Jan 2017, 65 PUT options mentioned above is now trading at $0.63 - $0.75. So unless we get strong move today, it might be sensible to taker partial position at least at these price. Here is the chart
The Adobe has been strong and on weekly above all major MAs on my chart but it could have topped as show on weekly chart
On daily we note price could bounce of the 50 & 100 MA towards $101 -02 when we will review in couple of weeks for new or adding to exiting trade. Here is the daily chart