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LivestreamMenuAdobe has had a rough few years. From its February 2024 high to its June 2026 low, the stock fell more than 70%. Year to date, ADBE is down 26%, making it the 30th worst-performing member of the S & P 500. In other words, more than 470 stocks in the index have outperformed ADBE this year. As a software stock, ADBE has also been caught in the recent weakness across the group. Investors have scrutinized its competitive position amid the rapid rise of artificial intelligence, driving sentiment to deeply pessimistic levels. Given the stock’s price performance, that skepticism is understandable. The more important question now is whether the worst is behind it: Has the selling already priced in much of the bad news, creating a more attractive risk/reward opportunity for long-term investors? We’re going to discuss four charts that suggest the answer may be yes. Starting with the monthly chart, which includes the 200-month moving average and 14-month relative strength index, or RSI, ADBE broke below its 2022 low earlier this year while also briefly falling beneath its 200-month moving average. That occurred just as the 14-month RSI reached oversold territory, marking the first time it had approached the 30 threshold since the March 2009 low during the financial crisis. Coincidentally, that was also the only other time in the stock’s history that ADBE traded below its 200-month line. The recent rebound has pushed ADBE back above its 200-month moving average, with the stock now approaching the former support zone that became resistance after this year’s breakdown. Continuing to trade above that level would strengthen the case for a classic bear trap reversal, especially given one of the most oversold monthly momentum readings in the stock’s history. Believe it or not, ADBE was one of the best-performing stocks in the S & P 500 during July, gaining 22%. That rally reclaimed the 200-month moving average and marked just the fourth monthly gain of at least 20% in the stock’s history. Two of the previous three occurrences, following the 2009 and 2011 lows, led to strong upside continuation. The lone exception came after ADBE was already well above the long-term average, unlike the present situation. The current setup is occurring immediately after a prolonged decline, making it much more comparable to the successful reversals than the failed one. Sticking with the monthly time frame, the bottom panel shows the moving average convergence divergence indicator, or MACD, which is close to triggering its first buy signal since 2023. From ADBE’s 2021 peak through late 2022, there was little technical evidence that the stock was ready to turn higher. Only after the broader market bottomed in October 2022 did ADBE begin to recover, ultimately leading to a monthly MACD buy signal and a meaningful advance. This time, ADBE has endured an even longer and deeper decline, leaving the stock in a much more washed-out position. With momentum beginning to improve, another monthly MACD buy signal could be approaching, providing another piece of evidence that the long-term trend may once again be turning higher. Lastly, the daily chart highlights what may become the most important technical test going forward: the 200-day moving average. Through the end of 2021, ADBE spent most of its time above a rising 200-DMA, with pullbacks to the line often marking attractive buying opportunities. Since then, however, the picture has changed. Throughout much of 2022, and again from 2024 through today, the 200-day line has been sloping lower and acting as resistance instead of support. If ADBE continues to rally, it will soon face another important test, with the 200-day moving average now less than 20 points above the current price. The last meaningful challenge came in late 2025, when the stock failed to break through. The more constructive comparison is early 2023, when ADBE spent several weeks oscillating around the line before reclaiming it and beginning a strong advance. Reclaiming the 200-DMA would represent another important step in the right direction and would complement the longer-term bullish signals discussed throughout this report. —Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: None All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.Read More
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