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3 Big Stock Charts: Alibaba Group Holding Ltd (BABA), Microsoft Corporation (MSFT) and Adobe Systems Incorporated (ADBE)

With Election Day finally upon us we should expect that traders and investors will do … nothing. After yesterday’s 2.2% gain in the S&P 500, we should expect that most will stay sidelined through the day and wait for the election results to flow in overnight before making their next move.

With that said, Tuesday’s edition of 3 Big Stock Charts is looking at Alibaba Group Holding Ltd (NYSE:BABA), Microsoft Corporation (NASDAQ:MSFT) and Adobe Systems Incorporated (NASDAQ:ADBE).

Alibaba Group Holding Ltd (BABA)

161108 BABA Price Chart
Source: Chart courtesy of

We mentioned a few weeks ago that Alibaba stock was following a similar trajectory as they approached earnings, as the crowd was “selling the rumor.” All that was necessary at that point was some decent numbers from the company, which we got. Despite the news, shares traded lower as the elections fears distracted traders from the story.

Now, shares of Alibaba are moving into position to rally in the wake of the election. Yesterday’s trading took BABA shares to just under the $100 level, where they faced a little selling pressure from the round-number resistance, which should be short-lived.

Once above $100, shares have the benefit of emerging from an oversold signal that was triggered last week when Alibaba stock’s RSI dipped below 30. The last oversold signal resulted in a fast 14% rally in shares.

Finally, short interest on Alibaba is sitting at nine times the average daily volume, which signals elevated probability for a short covering rally. We’ll expect that the move above $100 will get the shorts moving to close their positions, adding buying power to the shares.

Microsoft Corporation (MSFT)

161108 MSFT Price Chart
Source: Chart courtesy of

In another update top a previous article a few weeks ago, we warned that Microsoft was likely to see some bearish trading as the stock had rallied strongly after a positive earnings report. This rally put shares at risk of a “sell the news” move to take them lower, which is exactly what happened.

Microsoft pulled back almost 5% from its post-earnings rally, setting up a great opportunity for traders to swoop in and get the shares for a price much closer to their pre-earnings level. The stock found support at the $60 level, signaling that the upside potential has now grown larger than the downside.

Shares are in the middle of their range for volatility and in terms of their RSI, indicating that we would see a lower volatility rally higher as the stock’s 20- and 50-moving average lineup to provide steady support that will likely help carry the shares through the seasonally strong year-end period.

Keep in mind that the move above $60 takes Microsoft to new all-time highs, which will begin to garner more attention for traders and investors, especially when Apple Inc. (NASDAQ:AAPL) is lagging in the market. Microsoft looks to retain its leadership role in technology based on its charts.

Adobe Systems Incorporated (ADBE)

161108 ADBE Price Chart
Source: Chart courtesy of

Software giant Adobe Systems has been a relatively quiet performer in the market this year, leaving the clear majority of tech stocks in their dust as they’ve returned more than 17% year-to-date. Adobe’s next report isn’t due until December, but the stock has been making a move that suggests a “buy the rumor” rally may be in the works.

We’ve watched Adobe stock consolidate across the $105-$108 level since the end of September, maintaining relative strength against the market. That said, the recent slight dip in the stock brought Adobe shares close enough to an oversold signal that it appears likely momentum will now carry them through the $110 price and higher.

Traders want to keep an eye on the $110 level as this is where the top Bollinger band currently sits. A break above this will start a volatility rally that should gain traction and speed higher as momentum remains positive.

Finally, shares posted a 7% rally in the month ahead of earnings last quarter after testing technical support and a similar reading from the RSI. Remember, traders like similar charts, which is why we point them out here. We like the odds that this pattern repeats itself over the next month.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.

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