Adobe Beats Earnings Estimates
Adobe shares have been above a golden cross since March 15, 2019, when the 50-day simple Moving Average rose above the 200-day simple Moving Average to indicate that higher prices are ahead. This signal is almost reversed on nov. 8, 2019, but the 50-day simple Moving Average increased rather than decreased. When under a golden cross, the strategy is to buy weakness to the 200-day Simple Moving Average, which was feasible in September. 26, 2019, when the average was $ 270.88.
The stock recovered 49% from a low of octubre 259.57 in October. 23 to a high of febrero 386.74 in February. 20, which was a key bearish reversal day, as it closed on February 20. 20 was below the Feb. 19 low. This started a 34% decline to the March 18 low of $ 255.13. From this low, the stock rose 68% to its June 19 high of junio 429.27.
Adobe’s weekly chart is positive but extremely overbought, with the stock above its five-week modified moving average of.385.06. The stock is well above its 200-week simple moving average, or reversal to the average, at $ 225.59, which has not been tested in more than five years.
The 12 x 3 x 3 weekly slow stochastic reading ended last week rising to 93.09, up from 90.86 on June 12. This puts the stock above the 90.00 threshold that defines an inflatable parabolic bubble formation, which generally precedes a 10% to 20% decline over the next three to five months.
Trading Strategy: Buy Adobe shares in weakness at their monthly, quarterly, semi-annual, and annual value levels at respectivamente 403.44, respectivamente 349.18, respectivamente 337.11, and respectivamente 289.12, respectively. Reduce holdings in strength given the high stochastic reading.
How to use my value levels and risk levels: the closing price of the stock in December. 31, 2019, was a contribution to my proprietary analysis. The semi-annual and annual levels remain on the lists. Each calculation uses the last nine closures in these time horizons.
The level for the second quarter 2020 was set on the basis of the March 31 close, and the monthly level for June was set on the basis of the May 29 close. New weekly levels are calculated after the end of each week, while new quarterly levels occur at the end of each quarter. The semi-annual levels are updated in the middle of the year, and the annual levels are in play throughout the year.
My theory is that nine years of volatility between closures is enough to assume that all possible bullish or bearish events for stocks are taken into account. To capture stock price volatility, investors must buy stocks in weakness at a value level and reduce holdings in strength at a risk level. A pivot is a level of value or level of risk that was violated within its time horizon. The pivots act as magnets that have a high probability of being tested again before their time horizon expires.
How to use 12 x 3 x 3 weekly slow stochastic readings: my choice to use 12 x 3 x 3 weekly slow stochastic readings was based on backtesting many stock price boost reading methods with the aim of finding the combination that resulted in the least amount of false signals. I did this after the stock market crash of 1987, so I’ve been happy with the results for over 30 years.
The stochastic reading covers the last 12 weeks of highs, lows and closures for the stock. There is a gross calculation of the differences between the highest maximum and the lowest minimum against closures. These levels are modified to a fast read and a slow read, and I found that slow read worked better.
The stochastic reading ranges between 00.00 and 100.00, with readings above 80.00 considered overbought and readings below 20.00 considered oversold. A reading above 90.00 is considered an “inflatable parabolic bubble” formation, which is normally followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered “too cheap to ignore,” which is usually followed by gains of 10% to 20% over the next three to five months.