The Dow remains stuck in negative territory, but the Nasdaq has poked into positive terrain. Losses in the Nasdaq-100 are being mitigated by gains in Microsoft, Qualcomm, and Dell. What's not helping the Nasdaq-100 is software, Adobe, PeopleSoft, and Veritas are all down over $1.
The sell off in Software started when Adobe (NASD:ADBE) said that they would meet third-quarter earnings targets, but revenue was weaker than expected in July. The Stock is down $2.16, but off its low for the day.
Adobe Daily Chart
Since gapping up on April 10th, Adobe has vehemently defended support at $37.75. Unfortunately resistance at $48.77 has also been fiercely defended. That sets up a four-month trading range for the software stock. Recently the trading range has been cut in half by the 50-day moving average at $42.60. Buying at support and selling at resistance look like the only way to play this stock.
Software Index Point and Figure Chart
If a bet had to be placed on which way Adobe's trading range is going to break, odds favor the downside. The Software Index (GSO.X) had been consolidating, but gave a triple bottom sell signal in late June. That signal has remained intact, with a bearish price target of 165. Bullish percent data remains in bear confirmed status at 36, at has not quite touched oversold status yet.