Today we are going to look at Adobe (ADBE) to see what should be done with the stock. Is it time to buy or sell Adobe? We will look at the 7 fundamental parameters I look to see if a stock can be considered a growth stock. Then we will take a look at the technical analysis side using the setups I have created and use for my trades. I have no plans to own Adobe in the next 72 hours and do not hold any positions in Adobe (ADBE).
Adobe: Time to buy or time to sell the stock? (ADBE)
There are 7 fundamental markers I look for in a stock. I try to only purchase growth stocks so these are the parameters I look for to see if a stock meets the majority of the markers. I prefer to have all seven fulfilled. You can it more in depth here: https://evancarthey.com/how-to-scan-for-winning-stocks-an-insiders-view-to-my-process/
- Market Cap: > $300 million
- EPS growth past 5 years: >0%
- P/E: Over 10
- EPS growth next 5 years: >0%
- Sales growth past 5 years: Over 20%
- Debt/Equity: <0.1
- Sales growth qtr over qtr: Over 5%
Does the stock meet these 7 markers?
- Market Cap: 132.24B (YES)
- EPS growth past 5 years: 58.10% (YES)
- P/E: 49.01 YES
- EPS growth next 5 years: 22.65% (YES)
- Sales growth past 5 years: 17.40% (NO)
- Debt/Equity: 0.42 (NO)
- Sales growth qtr over qtr: 25.10% (YES)
I used Finviz.com for the fundamental analysis screener. With Adobe hitting 5 of 7 of the markers it just barely falls short of being considered a growth stock. Although the two parameters it missed it did so very closely. So this is a stock I would keep my eye on. Before I would trade just about any stock that fit my technical parameters. Unfortunately, I have had to learn the hard way that the fundamentals of a stock are just as important (if not more) than the technical setups.
Technical Analysis for Adobe (ADBE)
Adobe has just about completed a Reverse Lightning Trade long setup. When it hits the pink line then it will be complete at $275.54. With a hammer candle being formed yesterday then there is a good shot this gets completed in the next day or two.
ADBE is also in a short setup right now as well. It is the 38-127 trade short. Currently, the exit is at the pink line at $241.69. But if the price goes up and hits the blue line at $277.12 then the exit will move up to just north of the 61.8% Fibonacci extension level at around $250.00. This would be the final move of the exit, even if the price continued to go higher.
So if price retraces and hits $241.69 first then the move is over. But if the price goes up and hits $277.12 first then the exit moves to around $250.00.
Next, there is a 38-127 trade long setup. The exit is currently at the pink line which is $312.52. Price would need to go all the way down to the 61.8% Fibonacci retracement level at around $195 for the exit to move.
Finally, there is one long term consideration to keep in mind. Adobe has not fulfilled 3 short setups that I could find. I marked their exits with the pink line. This doesn’t mean it will happen anytime soon. But it is something to keep in mind because when the eventual bear market or stock market collapse happens then these are target levels to keep in mind.
Popular Links
Here are a couple of links if you are looking at how I view the market and some trade setups. You can create your own trading style and setups. Quit paying losing traders to teach you. The only thing they teach is how to lose money.
My Robinhood Shameless Plug
If this post benefits you and if you haven’t used Robinhood for trading stocks but are thinking to then please consider using my referral link when you do sign up: http://share.robinhood.com/evanc203.
This way each of us will receive a free share of a random stock if you sign up through my referral link.
My Robinhood Review: https://evancarthey.com/review-robinhood-trading-service-with-no-fees-part-1/
