Trading Strategies For Adobe Stock Before And After Q2 Earnings

Adobe, Inc ABDE opened slightly lower Thursday but bulls came in and bought the dip, causing the stock to spike higher. The company is set to print its second-quarter financial results after the markets close.

Analysts expect the company to report EPS of $3.79 on revenues of $4.43 billion for the quarter ending March 31.

Ahead of the event, JPMorgan analyst Sterling Auty maintained a Neutral rating on Adobe and raised the price target from $380 to $450. On Wednesday, three analysts weighed in on the stock and each bumped their price targets to between $470 and $530.

When Adobe printed its first-quarter earnings report on March 15, the stock rallied almost 6% the following day and an additional 9.08% between that day and March 31, where Adobe found a local top at $385.73.

For that quarter, Adobe reported earnings per share of $3.80, beating a Street estimate of $3.68 per share. The company also posted a top-line beat, reporting revenues of $4.66 billion compared to the $4.62-billion consensus estimate.

From a technical perspective, Adobe looks bullish heading into the event, printing a possible bull flag pattern on the daily chart. Of course, holding a position in a stock over earnings can be akin to gambling, as stocks can rise following an earnings miss and fall after reporting a beat.

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The Adobe Chart: When Adobe popped higher on Thur

sday, the stock reached above Tuesday's high-of-day at the $491.51 level, which avoided a possible bearish double top pattern. The rise also indicates that Adobe is attempting to break up from a bull flag pattern.

• The bull flag was formed between June 8 and Thursday, with the upward sloping pole created during the first four days of that time frame and the flag formed on Wednesday and Thursday. The measured move of the pattern is about 15%, which suggests Adobe could rise toward $546 in the future.
• Adobe is also trading in an uptrend, with the most recent higher low formed on June 7 at $417.74 and the most recent confirmed higher high printed at the $440.38 mark on June 5. If Adobe continues higher following its earnings print, the stock is likely to find its next local top soon because its relative strength index is measuring in at overbought.
• If Adobe suffers a bearish reaction to the news, a gap left below on June 9 between $439.03 and $453.09 is likely to fill. If that happens, traders can watch for the stock to print a possible reversal candlestick, such as a doji or hammer candlestick, near the lower range of the gap.
• Adobe has resistance above at $506.92 and $532.03 and support below at $485.62 and $451.15.

Photo via Shutterstock.