Adobe (ADBE)
Adobe stock jumped on the AI services bandwagon today as the shares are trading 14% higher after last night’s earnings.
For the quarter, the company announced earnings and revenue that were better than the Street’s expectations. The earnings data was accompanied by a mixed outlook from the company’s management.
Like so many other companies in this space, Adobe guided their fiscal year revenue in line with expectations while providing a mixed outlook for the next quarter’s financial results.
This combination of guidance suggests that the company expects a slowdown in business spending over the next three months with a strong end to the year.
From a broader perspective, that mix of guidance suggests that a lot of companies are preparing for a soft patch in the economy.
Adobe shares have been in a bearish trend since February. That trend deepened after last quarter’s disappointing earnings guidance.
In May, the stock dropped below its 20-month moving average, entering a long-term bear market trend for the first time since February 2022.
Today’s move takes the stock back above that trendline, but investors should be wary of a turnaround as short-term traders may take profits from this move.
Adobe stock remains neutral with the risk that falling back below $475 will keep the stock in its long-term bearish trend.
Bitcoin (BTC-USD)
Bitcoin dropped another 2%, now exceeding a 10% decline from its highs just more than a week ago.
The cryptocurrency has slowly rolled over after losing its battle with the round-numbered resistance at $70,000 but has now done something that it hasn’t since April 13.
Bitcoin dropped below its 50-day moving average as a result of today’s session, marking the first break below that key trendline since mid-April.
The move is likely to increase technical selling on the cryptocurrency.
The last break below its 50-day pushed Bitcoin 15% lower in just 19 days, completing a technical correction at a bottom of $56,000.
Coincidentally, $56,000 is where the 200-day moving average for Bitcoin currently sits, making this an easy target for traders to eye over the short-term.
Consider a break below $65,000 as the trigger for that move with an eye on entering new short-term positions at $56,000.
Microsoft (MSFT)
In an otherwise weak day of trading, Microsoft shares look to close the week at their all-time highs.
The software/AI company rallied earlier this week when it was announced that Elon Musk would be dropping lawsuits against OpenAI.
Microsoft has an arrangement to share profits with OpenAI, thus the positive effect of that headline.
Microsoft shares are trading at $422 near a technically oversold reading from a few of the stock’s technical indicators.
This suggests that it would be reasonable to see Microsoft shares take a short-term rest to pull back or consolidate, with $430 being the price that the market would likely lend support to the stock. Long term, the stock remains a buy with a target of $500.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.