Stocks are getting a boost in premarket trading as the Bank of Japan kicks off Central Bank day with the restructuring of its quantitative easing plan. The news has been digested as a positive for stocks so far
The big question, of course, is what will our Central Bank do with rates today. The Smart Money isn’t making a call on it, instead calling it a coin toss. We happen to believe that rates are likely to hold pat, which will be a bullish catalyst, at least over the short run.
Three charts that traders should have their eyes on this morning include Adobe Systems Incorporated (NASDAQ:ADBE), Cisco Systems, Inc. (NASDAQ:CSCO) and CBOE Holdings, Inc. (NASDAQ:CBOE), all of which are showing bullish tendencies and breakout potential.
Adobe Systems Incorporated (ADBE)
Adobe kicks off the morning with positive earnings news after the close yesterday. The company beat analyst expectations and raised their forward guidance. The results are that Adobe shares are trading about 6% higher and getting ready to move into a new trend.
Shares of the software company had mostly dropped ahead of the earnings announcement, showing that the market had little confidence in Adobe’s upcoming numbers. In addition, we saw short interest increase, indicating that the bears were betting against the earnings call. The positive news will get these investors to work as buyers almost immediately today.
Shares moved above their 50-day trendline yesterday and will surge higher today as the stock emerges from an oversold signal just a few days ago. A move above $104 opens some technical room for Adobe to rally towards $110 with little to no technical resistance as the stock is tracking new all-time highs.
Cisco Systems, Inc. (CSCO)
Networking company Cisco has been one of the more consistent trending companies within the Nasdaq 100. Shares have marched from $28 to $32 with little volatility since July. We did see a bit of a consolidation over the last two weeks as Cisco traded from $32 to $30, but the short-term pullback has been contained by its trusty 50-day moving average.
In addition to the intermediate-term support, Cisco is one of the stronger long-term bullish trends within its sector. The stock is coming off of a slightly oversold reading that occurred two days ago along with the cross back above its 50-day trendline.
The combination of these technical signals is indicating that the stock is set to move to the next level of its bullish rally in taking out the $34 mark and breaking the stock to its highest levels since 2007.
CBOE Holdings, Inc. (CBOE)
The CBOE and other exchanges typically enter a seasonally strong period of the year in September as volume and trading begin to pick up again. Looking at seasonality, CBOE Holdings outperformed the S&P 500 by an average of 70% of the time for September, October and November since 2010.
The seasonality provides a positive backdrop, but the recent technical triggers should get the stock moving faster.
After making a short pullback below their 50-day moving average, shares of CBOE Holdings quickly rallied back above this critical trendline as technicians took the opportunity to buy these shares on a quick deal.
In addition to the 50-day, the stock’s 20-day trendline is also providing support for traders, making the trend that much stronger. The sharp and decisive move back into its bullish trend was backed by heavy volume — another sign that the technicians are all over this stock.
Short sellers have been adding to their bearish bets of late as the short interest ratio for CBOE Holdings is 9 and at a relatively high reading. These shorts are going to start covering positions soon, adding to the buying pressure for CBOR Holdings.
The combination of trend strength and short covering should help to propel CBOE Holdings back above its highs from a year ago at $72.
As of this writing, the Johnson Research Group did not hold a position in any of the aforementioned securities.