4 Trade Ideas for Adobe: Bonus Idea

• Posted by Greg Harmon
• on December 23rd, 2024

Here is your Bonus Idea with links to the full Top Ten:

Adobe, $ADBE, comes into the week printing a bullish engulfing candle after a 6 day pullback. This happened on increasing volume Friday. The RSI is rising out of oversold territory with the MACD falling and negative. The engulfing candle came at the retest of June low. There is support at 438 and 430 then 420 and 410 before 389. Resistance higher is at 452.50 and 460 then 470 and 475 before 488 and 494. The stock does not pay a dividend.

The company is expected to report earnings next on March 12th. The January options chain shows big open interest from 460 down to below 425 with the biggest at 460 on the put side. On the call side it is spread from 450 to 475 but much smaller. The February chain has biggest open interest at the 425 put and the 475 and 480 calls. Finally, the March chain has biggest open interest at the 400 then 420 and 450 put strikes, and on the call side at 500.

Adobe, Ticker: $ADBE

Trade Idea 1: Buy the stock on a move over 452 with a stop at 430.

Trade Idea 2: Buy the stock on a move over 452 and add a January 445/430 Put Spread ($6.20) while selling the February 490 Calls ($6.20).

Trade Idea 3: Buy the January/February 460 Call Calendar ($9.20) while selling the February 425 Puts ($9.15).

Trade Idea 4: Buy the March 420/450/500 Call Spread Risk Reversal ($3.80).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with just 5½ trading days left in 2024, saw the week showing a crack in equity markets following the FOMC December meeting.

Elsewhere look for Gold to continue to consolidate the major move higher while Crude Oil consolidates in the lower end of a broad range. The US Dollar Index continues to drift to the upside while US Treasuries pullback in consolidation. The Shanghai Composite looks to consolidate in its uptrend while Emerging Markets may be reversing their uptrend.

The Volatility Index looks to remain low after spiking and pulling back making the path easier for equity markets to the upside. The charts of the SPY and QQQ continue to look strong on the longer timeframe. On the shorter timeframe both look a little weaker. The IWM is now weak enough that it is threatening the uptrend. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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