During Friday's Mad Money program, Jim Cramer told viewers what companies that were reporting earnings had his attention. On Wednesday earnings from a number of banks are due out but Cramer said the highlight will be Zoom Video Communications (ZM) , which has prospered during the pandemic.
We looked at the charts of ZM on October 8 and wrote that "Traders and investors should consider raising stop protection from a close below $300 to a close below $460 now." Prices have held steady and above our new stop level but let's check the price charts again.
In this updated daily Japanese candlestick chart of ZM, below, we can see that prices have been closing below the opening in recent days - that's what a red candle bar indicates.
Trading volume has declined and the On-Balance-Volume (OBV) line has been flat recently. Buyers and sellers are balanced which suggests that traders are not convinced one way or the other about the upcoming earnings report.
The Moving Average Convergence Divergence (MACD) oscillator has been in a take profits sell mode since late September.
In this daily Point and Figure chart of ZM, below, we can see that a trade at $469.25 could weaken this chart.
Bottom line strategy: As we have noted before, ZM is a symbol of our new economy. ZM has made a huge advance this year and while there are still some people who have yet to embrace Zoom, the stock has, I believe, discounted much of the news. It is not that traders are aggressive sellers ahead of earnings but rather where are the aggressive buyers? I would raise stop protection to $469 from below $460.
