Adobe post-earnings

Adobe is selling off after-market post-earnings. Anyone else thinking of buying tomorrow for a short-term hold?

Interesting. Didn’t see this until just now, after hours on Friday. It’s also interesting in that this was Max Pain week and the calculation on ADBE was actually with an increase of a little over 4% with a target for market makers of 575. Ended today at 492. Market Makers took it in the shorts…

Need to delve into things a bit more, to try and understand why. I’m usually up for a small intro position and add if things move in right direction. I’m not against “gambling” small amounts, but add to it if data supports.


Funny, today’s drop was in the volume markers on the chart, took a second to find it…

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Thanks for the reply. Interesting perspective with the market makers…

Here’s what I ended up doing, and it was just luck and the fact that I was available at the desktop at the morning and then the afternoon, both near open/close of market action.

I wanted to try a swing trade on this, hold it over the weekend. ADBE I have had trouble with before…not a completely resilient stock. You would think it would be given its potential for AI with creators. But whatever, I guess.

Anyway, bought in the morning and sold in the afternoon for a lucky 1.2% gain. I am not a day-trader, I don’t have a margin account, not interested in literal day-trading. Fastest I usually am is buy one day then sell the next…even then, I don’t really do that. Usually hold for at least a few. Unless I get lucky, which is always welcome. I’m sure I can get away with one of these and not get a notice.

For the unlucky buys: MSFT and META. Besides looking at some technical stuff, I also believe META might benefit from the NVDA conference if a halo effect hits the NASDAQ (I believe it is Monday for the conference, but double check that). MSFT…well, MSFT is MSFT, been strong, and I’ve successfully been in and out of that one several times. Very small gains though.

On your question about why on the move…I saw on Fast Money, one of the traders said historically ADBE always sells off on the report then at some point rallies back. I saw in the report that there will be a buyback, and he ended up quantifying that as perhaps 10%, something like that, of the float. I would have been confident holding into that if it came to it. May look to buy again, but like I say, I don’t have as good a handle on this name.

Out of curiosity, tried to look a little deeper. Yes, the board approved a stock by-back (note that they had already done 3 mill in 2023). They also beat earnings but the projection for next quarter was cooler. Not sure how much of that tempering was related to Sora, buy OpenAI did just release Sora their graphic AI tool. That is likely to have a significant effect going forward on them.

Interesting in that the vast majority of the “hit” was basically in the first 30 minutes after hours and with announcement. While it slipped further, it has not been with huge amount of volatility or bull-bear fighting. Do not believe this influenced nor was influenced by Max Pain.

Can’t say I’m encouraged by the chart overall. This is a two year daily, not much support until 450 or 470, a lot of resistance in the future.

One never knows and I’m glad you scalped some, but I am a lot happier chasing stronger candidates typically using verticals. You could get lucky, but likely it will take a while and I see capital better deployed targeting stronger candidates.

Happy hunting,

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That sounds like great advice on this name. I think this is one where indeed it would force one to sit it out for a while once buying. Which is not really in the spirit of trading (or learning to trade in my case). Also, meant to mention I will look into the max-pain concept you mention…

The core concept of Max Pain is that option positions, Puts and Calls, require a seller and buyer for the transaction. The vast majority of such positions taken by retail traders is balanced by market makers. Meaning, you buy a Put, there is a good chance that Put is sold by a “big boy” in the markets. The majority of options still expire on the third Friday of the month (although weekly options have dramatically expanded and diluted that) and is referred to OPEX or options expiration. So the third Friday of every month (last Friday for March) often sees a large flux of option expiration and money flux affecting positions. You can look at the amount of money in Calls versus Puts to see how it is all balanced out to give you a potential clue as to a directional move upcoming.

You can calculate that difference using free data from CBOE. As an example, roughly calculating the difference in the monetary value of Calls to Puts for QQQ last week on Monday showed roughly $3.7 BILLION dollar more in Put value than Calls. So that means if price stays the same, someone looses a lot. It actually on Wednesday was much higher. If you use the difference and look at where Puts and Calls would be roughly balanced, it calculates to around 403 price level on QQQ.

Obviously, it’s not one person or company that stands to loose that money, but that’s a lot of money. If you are holding an option that is ITM, there are things you can do to try and minimize the loss. Market Makers do some of that maneuvering and it can influence the price around OPEX. It’s called Max Pain as calculating that level shows how “max” the financial pain could be to the sellers of options.

Is it absolute? Of course NOT. I didn’t think much of it when I started learning about it a few years ago, but I have watched it enough to realize that is can be a directional clue and if I am looking at my positions and am on the fence about closing or opening positions (in stocks, not just options) it is one more straw added to the decision balance. I’ve never exactly totaled decisions and outcomes, but my general feeling is absolutely that I have saved money and earned money being influenced by the position of Max Pain. Not an absolute deciding factor, but a consideration in making decisions.

So what about QQQ? Max pain suggested the majority of position holders would be happier if the price was not in the upper 440’s but more towards low 400’s.

I don’t think I have ever seen it call the absolute final move, but it commonly is a directional hint. In this case, not a factor in ADBE, but certainly could have been a component to the drop in the QQQ as well as may have been a component to a lot of other positions. Learn and use based upon your own education. I don’t have to trade to survive, so tend to be cautious and such directional considerations play more of a role for me. Often I wait to see if I can get a better entry in positions I’m looking at going into OPEX. Often works for me. Note, the influence from Max Pain can extend well into the following week, so personally, I don’t jump on things on Monday.

Happy hunting,

So now it get’s interesting:

Strong day in the face of a so-so day. Suggested level of support and Friday hit of 61.8% retracement. PPO looks like it’s turning up.

Am I investing? Nope. But that’s only cause it doesn’t fit my overall plan nor risk-profit plan. But there is always a lot to learn from just following unique situations. I’ll follow with interest, just no cash. You do you.

Happy hunting,

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