WWM - Analytics

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    Today’s Trading Edge: Adobe shares surge after Q1 earnings beat

    WWM_ADBE_MAR_17_2016.jpg

    Adobe Systems Inc. (ADBE) shares rallied over 6.0% in after-hours trading to $95.40 after reporting strong first quarter results. Shareholders were pleased with the company’s earnings release after adjusted earnings per share came six cents higher than expectations at $0.66 and revenue came in at $1.38 billion, well above the eyed $1.33 billion. The strong results were supported from robust cloud-based service sales. During the company’s earnings presentation, the company provided better than expected guidance. Q2 EPS was targeted between $0.64-0.70 per share, higher than the analyst consensus of $0.64. Revenue is targeted within $1.36-1.41 billion, inline with the expected $1.38 billion analyst forecast.

    Price action on the ADBE 240-minute chart shows the initial breakout of the $90.00 resistance level. It appears that price will be poised to open on Friday above the 100-day SMA. The current rally is finding tentative resistance from both the $96.42 resistance level and a potential bearish butterfly pattern. Point D is targeted just ahead of the 141.4% Fibonacci expansion level of the X to A leg and the 261.8% Fibonacci expansion level of the B to C move. If bullish momentum continues price may have a clear path to the century level. If we see the potential reversal pattern respected, we could see a pullback towards $92.50 region. If that level breaks, we could see price eventually target a slide towards $90.00.

    The Trade: Buy ADBE at $92.50, with a stop loss at $90.50 and a take profit at $98.50.  The Risk/Reward Ratio is 1:3 


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