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Adobe Inc (ADBE) - February 21, 2024

Software producer Adobe, Inc. (ADBE) has seen its relative strength weaken dramatically over the last two-plus months. On December 10th, it was in 10th place near the top of the green zone in the SIA NASDAQ 100 Index Report but fell out of the green zone before the month could end. Adobe spent most of this year drifting in the yellow zone but recently, it has weakened further, falling into the Red Unfavored Zone for the first time since May. Yesterday, ADBE finished in 55th place, down 4 spots on the day and down 25 positions in the last month.

Adobe’s performance in recent months also highlights how movement between zones in the SIACharts reports can help identify outperformers, underperformers and key turning points. During the time Adobe was in the green zone of the SIA NASDAQ 100 Index Report, it climbed 24.3%, while the NASDAQ Composite Index rose 5.2%. Since exiting the green zone, ADBE is down 9.1%, while the NASDAQ is up 3.5%.

Candlestick Chart Breaks an Uptrend Line:

Adobe (ADBE) shares staged a major breakdown yesterday. Accumulation in the shares was already running out of steam with the shares failing to break through $630.00 resistance earlier this month, establishing a lower high and forming a Double Top failure, which is bearish in candlestick charts.

Yesterday, the shares turned decisively downward, snapping two uptrend lines, and falling back under $550.00 on a spike in volume, indicating a significant increase in selling pressure. Next potential downside support appears in the $480.00 to $500.00 area where a round number, measured move and previous support and resistance cluster. Initial resistance drops toward $580.00.

Point and Figure Chart Rolls Over:

Adobe (ADBE) shares staged a strong recovery rally up out of the 2022 market bottom, advancing in a step pattern of rallies followed by periods of consolidation at higher levels. Over the last two months, it appears that accumulation has wound down with resistance emerging near $642.20, short of the late 2021 peak.

This month, the shares have rolled over and broken down, taking out $4560.0 support and completing a bearish Double Bottom pattern, signaling the start of a new downtrend. Initial support may emerge between $496.45 and the $500.00 round number, where a number of previous column highs and lows cluster. A similar cluster appears in the $440.80 to $458.65 area, which also aligns with a horizontal count. Initial resistance on a bounce appears near $593.30 based on a 3-box reversal.

With its SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) dropping to a bearish 5 out of 10, ADBE is exhibiting short-term weakness against the asset classes.

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