Charts to Watch: SPX, ANET, ADBE

**SPEAKER_1** (0:01)
It's time now for Charts to Watch. Kevin Horner, Senior Manager, Trading Services of Charles Schwab, is with me taking a look at some charts, and we're looking at the S&P 500 Of course, the high, the most recent high was 78.16, and I was just peeking to see where we are. We're at 76, 76, so we're not even close to the high, especially because we have a down week. We're down one and a half percent. So, some of your thoughts.

**Kevin Horner** (0:26)
Well, 76 was a great year as far as I recall, but that stated I'm watching this 20-day moving average on the S&P, Nicole. You know, we should not be shocked at all to have seen a retreat after running into 7,800.
Bullishness persists, and yet what we've seen is simply a pullback to an area of short run support. And it's often the case, Nicole, that we break through an area of resistance and then we just pull back to start trending thereafter, giving bullish traders, in this case, maybe a more comfortable entrance to the trend. It's not at all uncommon to start moving with a faster moving average like the 20 days. So that's kind of what I'm positioning for or watching for rather, is do we maintain the 20 on today's close, which is going to look like a support test over the last two days. And then it can offer us support as well moving forward into next week. And we'll see if that run on the 20 day continues. But ultimately, we like the break through 76.2 and the little breather we've taken over the past week at this point has done nothing but confirm short term trend support perhaps.

**SPEAKER_1** (1:33)
Okay. And what about Arista Networks? That's another name that you're watching. The chart jumped out at you. Why?

**Kevin Horner** (1:40)
Well, this one again allows me to talk about something that commonly occurs. You know, again, Nicole, we've got breakouts, throwbacks. This is very, this scenario plays out frequently. So you see Arista Networks broke out following the earnings in early August, and it rallied all the way up into 210 All we've done now is pull back to the area from which we broke out. Now, the reason it's really catching my eye today, more so than anything else, is that the candle today validates the potential for closing above the highest price from yesterday. And yesterday appears to be the low in this two week pullback from the all time high. So, if that's in fact the way this closes today, Nicole, then we have a close above the high of the low day. It's often a signal that some traders will use to step into a position they've been waiting to invest in.
And this could be the beginning of the continuation move, perhaps, back up into that 210 zone. If nothing else, the reason that traders will fall into this comfort zone with co-hold moves is that it validates the area of near-term support for them. And of course, nothing in technical analysis tells us what's going to happen next. It just helps us to understand where things would look different or change on the viewpoint. And I think that's pretty clear at the 178 level, that horizontal support as well as the 50-day moving average right beneath it around 177.5, all of which, if we saw the trades under that zone, we would then have to become a bunch more defensive. But today's candle certainly optimistic for Arista.

**SPEAKER_1** (3:22)
Yeah, and I saw, by the way, I saw that BNP PowerBow has a $200 price target and an outperform rating. Barclays with a 289 target. So both higher than where we are today there. What about Adobe?

**Kevin Horner** (3:38)
Well, you know the story on Adobe, Nicole. It's been a really rough slide for it, but it's had a good two to three month run here. We've seen a 45% push upward into the 200 day moving average, but I'm a bit dubious because, you know what, if you're trading the trend, it's hard to look at this as anything other than bearish. Now, what I've drawn in in this two year chart are the Fibonacci retracement lines and that line that we are sitting at, coincident with the 200 day moving average and the prior high we just made back in mid to late May, 277 or so, that's the first layer of a Fibonacci retracement spot. So it's absolutely an area where we could witness resistance really playing part here. It's also being that it's consistent with the 200 day moving average, really validates that level of importance. If we can pop through the 277, we could easily see a momentum move into my second red line there at 298