Adobe: Entering the Fourth Wave — Smart Money Distribution Phase

Adobe’s stock is entering a critical structural phase — the completion of its third global impulse and the start of the fourth corrective wave.
While the long-term uptrend remains intact, the price structure and fundamentals suggest that the most explosive growth period may already be behind us.

🧭 Long-Term Technical Context

Looking back to the early 2000s, Adobe has moved through a textbook Elliott Wave structure.
The first and second waves built the base, while the third wave delivered the explosive rally — from roughly $30 to $600, marking a 20x increase.

Now, the fourth subwave of the third major wave appears to be forming — a phase typically characterized by sideways consolidation and distribution by institutional players.

🔺 Wave 4 Triangle Formation

In many long-term wave structures, the fourth wave forms a triangle (ABCDE pattern) — a contracting structure where price oscillates between defined boundaries.

We can already observe the emerging shape:

• Wave A and B are complete
  
• Wave C is in progress
  
• Wave D and E will likely complete the pattern before the final breakout
  

Once the triangle ends, a final Wave 5 push could occur — potentially extending toward $700, or in an extended scenario, even $2000.

📊 Trading Range and Short-Term Strategy

At this stage, smart money tends to distribute positions gradually.
The price is oscillating within a broad corridor, providing opportunities for range-based trading:

• Buy zones: near the triangle lows (Wave A area around $350)
  
• Profit zones: near the triangle highs (Wave B area around $600)
  

For swing traders, this range offers multiple short-term opportunities before the next major move begins.

💵 Fundamental Context


Despite being in a late-wave structure, Adobe’s fundamentals remain strong.

• Share buybacks: The company continues to repurchase its own shares, supporting EPS growth.
  
• EPS trend: Rising steadily year over year.
  
• Revenue growth: Stable, around +10% YoY, with quarterly metrics showing +40% growth since Q1 2024.
  
• Forward P/E: Approximately 28, which, by Peter Lynch’s growth-to-PE logic, still appears reasonably valued.
  

These metrics suggest that even in a market downturn, Adobe’s downside risk may be more limited compared to weaker tech peers.

🧮 Fundamental Summary

✅ Consistent buybacks supporting EPS
✅ Double-digit annual revenue growth
✅ Attractive valuation relative to growth metrics
✅ Strong defensive profile versus the broader tech sector

There are no visible signs of fundamental weakness — only technical consolidation after years of exponential expansion.

⚠️ Alternative Scenario

If the stock breaks below $270, the current wave structure may need adjustment.
Such a move could imply a larger triangle or a flat correction, but the broader interpretation — that we’re inside a long-term Wave 4 — would remain valid.

📈 Market Outlook

Adobe is transitioning from a high-momentum growth phase into a strategic accumulation and distribution phase.
The stock is unlikely to replicate its earlier explosive rally, but it continues to offer structured trading opportunities inside a stable technical range.

For long-term investors, the risk-reward remains balanced, supported by solid fundamentals.
For traders, the triangle provides a clear framework: buy near lows, take profits near highs, and wait for the fifth wave breakout.

🧩 Summary

• Price structure suggests Wave 4 triangle formation
  
• Trading range between $350–$600
  
• Fundamentals remain strong and defensive
  
• Forward P/E at 28 — reasonable given EPS growth
  
• Next major target: Wave 5 breakout toward $700–$2000
  

Adobe is no longer in its most explosive phase — but it’s far from weak.
This is a mature consolidation period, not a decline story.
For disciplined traders, the triangle may offer some of the cleanest swing setups in the tech sector.

📹 Full video analysis on my YouTube channel — check it out for detailed charts and Elliott Wave breakdowns!