The New Year is starting on a slippery slope for a few of the Nasdaq 100 stocks as they start the first day of 2017 on some technically unstable ground. After a strong 2016, the charts for Adobe Systems Incorporated (NASDAQ:ADBE), Electronic Arts Inc. (NASDAQ:EA) and Qualcomm, Inc. (NASDAQ:QCOM) are all showing that these stocks have become tired as they move into 2017.
With a strong first day’s trading, these three Nasdaq 100 leaders are tripping below a key technical trendline that may be a determining factor for the intermediate-term outlook on these popular stocks. Is it time to bail on these market performers?
Adobe Systems Incorporated (ADBE)
Adobe shares sported a 35% 12 month gain as they headed into the last quarter of 2016. The gains were driven by a successful launch of subscription-based products that the market adopted well. Over the last quarter, ADBE shares have limped into the year-end trade, losing momentum and relative strength.
Now, Adobe hits 2017 on a soft spot as the stock is breaking back below the critical 50-day moving average, which is in a declining pattern.
The year-end trading brought some optimism for the ADBE bulls, but the earnings-related rally was quickly reversed and fell back into the intermediate-term bearish trend. Now, with volume light and traders looking for industrial-based trades, Adobe shares appear ready to continue their descent.
For now, the charts tell of a price target that is about 3.2% lower than the market as the $100-level will be supportive for ADBE shares. This support is based on the round-numbered nature of $100 (never bet against this simple technical rule) and the fact that Adobe stock’s 200-day moving average is hovering right at the same price.
A break below $100 will make a quick target of $94, which is where our current target resides for Adobe shares. This is the site of the long-term bull market trendline that has held ADBE in a positive trend since October 2010. This is the point where the market and traders will decide on where 2017 takes Adobe.
Electronic Arts Inc. (EA)
Electronic Arts is another one of the stocks that we saw perform through 2016 as the shares traded 14.6% higher during the year on demand for their video games. As many can imagine, EA follows a seasonal trend that surges ahead of the holidays based on sales expectations.
Not so much this year, as Electronic Arts fell into an intermediate-term bearish trend that is now extending itself into the New Year.
EA shares are trading below their declining 50-day trendline, again, after pressuring the last line of intermediate-term support with their 200-day trendline. The combination of continued weakness from the 50-day and the recent test of the 200-day should have traders on alert as a lower price target is the reality for Electronic Arts.
Watch for the $76-level to provide some volatility as the 200-day tries to hold EA shares up, but a break below this point — which we think is likely — will generate a price target of $72 during the month of January.
Qualcomm, Inc. (QCOM)
Semiconductor chip companies were among the strongest performing groups in the market for 2016. Some of the larger names like Intel Corporation (NASDAQ:INTC) failed to keep up with the group, but Qualcomm was there all the way returning 30.4% for 2016.
Therefore, it’s impressive that QCOM shares actually lost more than 4% over the last quarter as the stock lollygagged and moved sideways at best. The sideways activity has caused a transition in the trend of Qualcomm that is now suggesting that the stock is at risk as we head into the New Year.
Already trending below the declining 50-day, QCOM is now challenging the 100-day moving average, which is also transitioning into an intermediate-term bearish trend. The break of the $65-level to the downside will set a technical target of $60 for Qualcomm, some 8% lower than this morning’s trading indication.
For the most part, we look for opportunities from market leaders like QCOM, with the shares having spent the last quarter giving up that role and now setting themselves up for a non-eventful first quarter of trading.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
