Adobe gets an upgrade ahead of earnings, but one chart shows it could be headed for a pullback

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A 'negative divergence' in Adobe's chart suggests the stock could be headed for further weakness, says Piper Sandler's Craig Johnson.

from analysts at Cowen ahead of its earnings report next week. The firm cited several catalysts, including demand for Adobe's cloud products as cause for the stock to climb as high as $555. Its price was $481 a share in Monday's premarket, up 2%.

"Typically, to us, that suggests to us that the stock is a little bit tired," he said. "I'd be waiting for a deeper pullback, perhaps all the way back to the 200-day moving average, which suggests a poor risk-reward right now." Steve Chiavarone, a portfolio manager, equity strategist and vice president at Federated Hermes, said software and semiconductor stocks should continue to rise over the long term.

"Shorter term, though, we think as this economic recovery takes hold that the market strength is going to broaden and not just be concentrated in these secular winners, but spread out to more cyclical parts of the market like value stocks, small caps and international," Chiavarone said. "So, if you like these names longer term, we think that they're good long-term investments. Short term, we think there could be a little bit of chop.

 

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sapna987 $555 on Wednesday morning would be amazing :)

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