Adobe Inc. (ADBE) beat earnings estimates when it reported results on the 11th of June, and the stock traded higher. Adobe stock set a new all-time intraday high at $429.27 on Friday, June 1.
The company is a popular game on the cloud computing. However, the stock is not for value investors – this is a play on the technique of the swing. Adobe has a P/E ratio of 55.73 and does not offer a dividend, according to the trends.
Adobe has beaten earnings estimates for six consecutive quarters, and the new top is the weekly chart is positive but extremely overbought. It is in an inflation parabolic bubble formation 12 weeks stochastic reading above 90.00 (at 93.09). It is a signal to take profits.
The daily chart for Adobe
Refinitiv XENITH
Adobe stock has been above a cross of gold, since March 15, 2019, when the 50-day simple moving average rose above the 200-day simple moving average to indicate that the price increase to come. This signal is almost reversed on Nov. 8, 2019, but the 50-day simple moving average has increased instead of decreasing. Where, under a cross of gold, the strategy is to buy weakness to the 200-day simple moving average, which was feasible on the Sep. 26, 2019, while the average was $270.88.
The stock rallied 49% from a low of $259.57 on Oct. 23 to a maximum of $386.74 on Feb. 20, which was a downside key reversal day, as the end of February. 20 was below the Feb. 19 low. This has started a decline of 34% to the March 18 low of $255.13. From this low, the stock rallied 68% from its June 19 high of $429.27.
The weekly chart for Adobe
Refinitiv XENITH
The weekly chart for Adobe is positive but extremely overbought, with its five-week modified moving average of $385.06. The stock is well above its 200-week simple moving average, or the return 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 is finished the last week, an increase of 93.09, of 90.86 June 12. This puts them above the 90.00 threshold that defines an inflation parabolic bubble formation, which generally precedes a decline of 10% to 20% over the next three to five months.
Trading strategy: Buy Adobe stock on the weakness of its monthly, quarterly, semiannual and annual value levels at $403.44, $349.18, $337.11, and $289.12, respectively. Reduce operations force, given the elevation of the stochastic reading.
How to use my value levels and risky levels: The share price closing price on Dec. 31, 2019, has been an entry to my proprietary analytics. Half-yearly and annual, the levels are still on the charts. Each calculation uses the past nine closes in these time horizons.
The second quarter of 2020 the level has been established based on the 31 March, close by, and the level of the month of June has been established on the basis of the May 29 close. New weekly levels are calculated following the end of each week, while new quarterly levels occur at the end of each quarter. Half-yearly levels are updated at mid-year, the levels are set throughout the year.
My theory is that nine years of volatility between the farm are to assume all possible bullish or bearish event for the stock are taken into account. To capture the volatility of stock prices, investors should purchase shares of the weakness of a plan, the value and reduce the holdings of the strength to a risky level. A pivot is a level value of the risk level that was violated in its time horizon. Hubs act as magnets that have a high likelihood to be re-tested prior to their time horizon expires.
How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings has been based on the backtesting of many methods of reading the stock prices of the momentum with the objective of finding the combination that resulted in the least number of false signals. I’ve been following the stock market crash of 1987, so I was happy with the results of more than 30 years.
The stochastic reading covers the duration of 12 weeks, high, low, and close for the stock. There is a row of calculation of the difference between the highest and the lowest compared to the farm. These levels are modified for a fast reading and slow reading, and I found that the slow playback will work best.
The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered as overbought and readings below 20.00 regarded as oversold. A reading above 90.00 is considered to be a “swell parabolic bubble” of the training, which is usually followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered to be “too cheap to ignore,” which is usually followed by a gain of 10% to 20% over the next three to five months.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: investopedia.com
