Earnings and upgrades are moving stocks in the technology sector today. Adobe Systems Incorporated (NASDAQ:ADBE) announced better than expected earnings while Netflix, Inc.(NASDAQ:NFLX) is seeing some cautious comments from the analyst community and International Business Machines Corp. (NYSE:IBM) saw an upgrade to its price target from Morgan Stanley yesterday.
All three of these stocks were already operating in strong bullish trends, but the recent price activity is signalling that the bulls are getting ready to engage these stocks again.
Adobe Systems Incorporated (ADBE)
Adobe announced earnings this morning, surprising the Street with better-than-expected results. ADBE shares are trading more than 5% higher after the news.
Adobe shares have been trying to break into another volatility rally for the last week, but had failed to move above their top Bollinger Band. Today’s news will change that as ADBE stock will open outside of the bands and likely see a further surge.
We saw a 9% reduction in the short interest on Adobe ahead of the earnings announcement, indicating that the short selling crowd has already started trying to get out of the way of ADBE shares breaking to new highs.
Shares have been overbought as Adobe is one of the few companies that has been on a slow and steady rally while the rest of the market consolidated. This means that we might see a little “selling of the news”, but given the volatility break, any weakness will quickly be bought into by those technical traders that have been waiting for a slight opportunity to pick up this outperformer.
Netflix, Inc. (NFLX)
Shares of Netflix were trading weaker this morning on cautious comments from M Science on the company’s subscriber metrics. The news balances out against an upgrade yesterday and NFLX stock pushing against new highs.
Netflix shares have been creeping higher towards an overbought signal that will likely trigger a short-term shot of selling as the profit-takers will edge off of their positions, but the short- and intermediate-term trends remain strong and in place to support prices for a healthy pullback on NFLX stock.
Support for Netflix stock sits at $140 with the next likely resistance level positioning itself at $150, but the chart is hinting that we could see a move to $155.
The shares have been consolidating, while edging slightly higher. A break above the $146-level will crack the seal on NFLX’s top Bollinger band, which would then target $155 on a new volatility rally.