Can ZM rise further from the ashes? Let's check the charts and indicators.
In the daily bar chart of ZM, below, we can see that the share price has had a hard time the past year. Prices are down sharply but have made a low in May. The slope of the 50-day moving average line has bottomed and turned slightly positive. The declining 200-day moving average line intersects around $150.
The On-Balance-Volume (OBV) line made a low in late May but shows an uneven trend of improvement. The Moving Average Convergence Divergence (MACD) oscillator shows higher lows from December and is trying to stay above the zero line in positive territory.
In the weekly Japanese candlestick chart of ZM, below, we can see a bottom-reversal pattern in May but the pattern turned the trend from down to sideways and not from down to up. The weekly OBV line turned neutral in the past six weeks. Prices are still below the declining 40-week moving average line.
The MACD oscillator has been improving for months now but still remains below the zero line as there is not enough trend strength.
In this daily Point and Figure chart of ZM, below, we can see a potential upside price target in the $140 area.
In this weekly Point and Figure chart of ZM, below, we can see a price target of $139.
Bottom-line strategy: In our May 31 review of ZM we wrote that "Aggressive traders could probe the long side of ZM ahead of earnings. This is just a bounce trade as ZM has not formed a new base pattern. Use a reasonable sell stop like $75 and look for a rebound into the $125-$150 area." I do not mind company from fundamental analysts but I will suggest that longs from late May look to take profits towards $125 in the days ahead.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
Here's why we think a more defensive approach is appropriate now.
Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation.
If you have questions, please contact us here.