Hi Shoppers,
One of this week's names printed a record quarter two weeks ago and raised its guidance for the year. The stock has barely caught a bid since. The other got dumped so hard that investors pulled $3.3 billion out of it in a single week.
I'm buying puts on the first one. The second one could be a long, but only if one candle does its job.
The stock to buy puts in this week is Adobe (ADBE).
Check out the ugly chart:
Tuesday's big red candle knocked the stock down about 4 percent to $239. The last two days are building a bear flag off that candle (a short, weak pause that usually breaks the same direction as the drop before it). I'm looking for the stock to trade down to the bottom of the channel at $226.66. Use a close back above $240 as your stop loss.
You know Adobe from Photoshop and the PDFs on your desktop. Almost everything it sells runs on subscription, and it bought Semrush this year to help brands show up in AI search results. Last quarter it booked a record $6.76 billion in revenue, up 13 percent, and its AI products now bring in more than $650 million a year.
Investors sold it anyway. Adobe's down 32 percent this year while the S&P 500 is up 14 percent, the worst showing in its software peer group. Management guided next quarter a hair below Wall Street, the CEO hands the job to Anil Chakravarthy on December 1, and the head of the creative business walks out this weekend.
The part that worries me most is the backlog (revenue customers have signed up for that Adobe hasn't booked yet). It grew 8 percent last quarter, down from 13 percent the quarter before. Adobe's pushing people into free versions of Firefly and Acrobat and hoping they pay later, and that costs money now.
The iShares Russell 2000 ETF (IWM) may be a long this week. I need confirmation that Thursday's candle is a dragonfly doji (a candle where sellers shoved the price way down and buyers dragged it right back to the open). That can mark the bottom of a downtrend, and this one held the support of my pitchfork perfectly:
The confirmation I want: IWM trading above the high of that candle. My target from there: $288. Use a close back below $281 as your stop loss.
IWM holds the little guys, roughly 2,000 U.S. companies too small for the S&P 500. Back in July, small caps were on pace for their best year since 2003, and IWM hit $305.18 on August 14. The Russell 2000 has dropped 7.3 percent since then to its lowest level since June 10.
Small companies carry more floating-rate debt than the giants, so rising yields hit them first. That's why investors yanked $3.3 billion out of IWM last week, its second-biggest weekly outflow of 2026. If this candle holds, I want to be there when the selling dries up.
One of these could end up as the team's option play of the week. We'll hash out everyone's loves and leaves live on the Ticker Highlight Show and make the pick together.
Trade Accordingly,
Licia Leslie