Earlier I noted some call activity on Adobe Systems Inc (ADBE). Now I see that there was also a positive analyst comment on the stock. This optimism leaves me somewhat concerned as it comes ahead of tonight's earnings report.

Perhaps I am just not looking at the "right" stocks but it seems that this hasn't been a great time for earnings reports. We have a weak economy and the Nasdaq Composite (COMP) hitting a new annual low. A look to the chart of Adobe shows the stock is trading at a key short-term level.

Chart Courtesy of Thomson Financial

On the bright side, the stock is still holding above support at a time when many other stocks have broken down. Furthermore, the stock is also showing a short-term oversold condition based on the Relative Strength Index (RSI). An oversold stock trading at support should be primed for a technical bounce. Of course, the wild card here is what the company says.

My concern is that the optimism from both call buyers and the Street suggests that expectations are running high. It is possible that the company can still hurdle that bar but I think it raises the odds we see a disappointment. In a situation like this, I would rather take a wait-and-see approach. If the company can deliver and the stock gaps up, there will still likely be a good entry point over the near term. However, I think that risk outweighs reward right here.