Fundamental coverage of Zoom Video ( ZM) was started Friday by a sell-side firm with a "sell" rating. Zoom has become a part of our everyday speech like Xerox and Kleenex. Despite this almost universal acceptance, the charts of ZM are weak and probably headed lower.
In this daily bar chart of ZM, below, we can see the prices have been in a long and painful slide lower the past 12 months. Prices are trading below the negatively sloped 50-day moving average line as well as the bearish 200-day line.
The On-Balance-Volume (OBV) line has not made a new low a yet, but it has been weak for much of the past year. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of ZM, below, we see a bearish picture with a twist. In the early years of my career I looked at many commodity charts and noticed that the rises could last around two years or so but the declines were shorter - around nine months.
When I look at this chart of ZM I notice that the rally phase was shorter than the declining phase. Despite this drawn out decline, the chart is still negative. Prices are below the declining 40-week moving average line. The weekly OBV line turned lower in late 2020. The MACD oscillator is bearish too.
In this daily Point and Figure chart of ZM, below, we can see a nearby price target in the $72 area.
In this weekly Point and Figure chart of ZM, below, we can see that the software is generating a price target in the $73 area.
Bottom line strategy: In our August 4 review of ZM, we recommended that traders take profits on longs towards $125. I hope that traders booked profits last month. Traders should stand aside from ZM probably through the end of the year.
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Let's check the charts again as ADBE rises higher.
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