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Adobe Inc. - (ADBE) - March 18, 2024

Software producer Adobe Systems (ADBE) plunged 13.6% on Friday as investors reacted negatively to the company’s latest earnings report and guidance. The shares, however, had already been struggling technically on an individual stock and on a relative strength bases for some time ahead of the results.

Adobe fell out of the green zone in the SIA S&P 100 Index Report and the turn to relative weakness was featured in the February 21st edition of the Daily Stock Report. Since then, the shares dropped 9.1%, while the S&P 100 Index is up 2.7%.

Following a drop of 18 spots in the SIA S&P 100 Index Report on Friday, to 68th place, ADBE has returned to the Red Unfavored Zone for the first time since May of 2023. Adobe Systems (ADBE) shares have been struggling since faltering for a second time near $630,00, short of the 2021 peak, earlier this year. Following a February selloff, the shares tried to recover but the bottom fell out from under them on Friday. A breakaway gap downward on a jump in volume took out rising and horizontal support lines, indicating increased selling pressure and signaling the start of a new downleg.

Initial support may emerge near $475.00 but if that were to fail, next potential downside support may not emerge until an uptrend line near $410.00, or the $400.00 round number. Initial resistance on a bounce may appear near the $500.00 round number, or $525.00.

A major breakdown is underway in Adobe Systems (ADBE) shares. A breakout rally that had been looking good in December stalled out near $640.00 over January and February. For the last six weeks, the shares have been backsliding, completing a bearish Double Bottom breakdown followed by two Spread Double Bottom breakdowns. This retreat indicates that the shares have come under distribution.

Previous column highs/lows suggest the potential for downside support near $467.80 or $407.25. In between them, a horizontal count suggests potential support near $440.83, Initial resistance on a bounce appears near $537.40 based on a 3-box reversal.

With a completely bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 0 out of 10, ADBE is exhibiting short-term weakness across the asset classes.

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