ADBE Stock is a Long-Time Winner
Adobe Systems Incorporated (NASDAQ:ADBE) stock is one of few stocks possessing an impeccable stock trend. If you purchased ADBE stock on August 11, 2011 at $22.67, you would currently have a gain of 343%. This is a considerable gain. ADBE stock represents an opportunity to trade an instrument that abides to technical signals and has a tendency of repeating patterns.
Once we identify a trend and trading patterns, we can set up a strategy to capitalize from the information we have gathered.
The following chart illustrates the bullish signal known as a golden cross.
Chart courtesy of www.StockCharts.com
On February 8, 2012, ADBE stock generated a golden cross, which is a bullish signal that is produced when a 50-day moving average, highlighted in blue, crosses above a 200-day moving average, highlighted in red. Traders use this signal to confirm that a bull market is on the horizon. It is wise to trade in the direction of this signal. A trader’s position should either be long or neutral.
The significance of the golden cross is especially strong for ADBE stock. The signal that was generated in February 2012 is still in full effect today. If you just followed this one signal, you would still be long in the stock, and enjoying considerable gains.
On three different occasions, the moving averages were on the verge of executing a death cross and, each time, that signal was averted. If you are not familiar with this signal, it is the exact opposite of the golden cross, and assumes that a bear market is on the horizon. Averted signals confirm the current trend, and have a tendency of accelerating that dominant trend.
The following chart below only illustrates the 200-day moving average.
Chart Courtesy of StockCharts.com
The 200-day moving average is the dividing line between stocks trading in a bull market versus stocks trading in a bear market. When the share price is above the moving average, it is bullish; when the share price is below the moving average, it is bearish.
ADBE stock has spent the majority of the time trading above the 200-day moving average. There are numerous instances highlighted on the chart where ABDE stock broke below the aforementioned moving average. These instances have proved to be buying opportunities, rather than a bearish omen.
I would never recommend buying on a break below a long-term moving average, because this would require trading against a signal. Trading against a signal would require breaking rules of discipline. Breaking one rule leads to a slippery slope of rule-breaking, and before you know it, you no longer have a strategy to abide by.
A possible strategy of accumulation would be to wait until shares close back above the 200-day moving average, while a golden cross is still in effect, before accumulating shares. This strategy won’t catch the exact bottom, but it will discipline as a major objective.
The Bottom Line on ADBE Stock
ADBE stock is an example of an opportunity to trade an instrument that holds trading signals for long durations. There have been instances where a breach of the 200-day moving average set off a possible bearish signal, but it was never confirmed by a death cross. I believe that ADBE stock will continue to trade higher. If shares do fall below the 200-day moving average, it may prove to be a buying opportunity until a death cross confirms that indeed the trend has reversed. It is at that point that I will have the necessary signals to confirm that the trend has changed.
ADBE stock can be a good investment for trend followers looking for steady gains. If you’re looking for an investment with more excitement, then I suggest you check out the report my colleague has just released“Military’s ‘6th Branch’ to Create 22,000 Millionaires Again?” Click here now to get the full story. It is definitely worth checking out.