Zoom Video Communications (ZM) is scheduled to report its latest quarterly numbers after the close of trading Monday. The stock of the company that everyone learned about during the pandemic has been slammed in the past year but some of the technical indicators that I monitor are showing some improvement and some bullish divergences may finally generate a bounce to the upside. Let's check.
In the daily bar chart of ZM, below, we can see a long and painful slide from around $400 in July to less than $100 this month. Prices are trading below the declining 50-day moving average line as well as the bearish 200-day moving average line. With the shares trading at half the value of the intersection of the 200-day line I would consider the price extended or oversold.
Trading volume has increased since March and the On-Balance-Volume (OBV) line has been in a decline from July but the pace of the decline has slowed down with the May low only slightly lower than the March low.
The 12-day price momentum study in the lower panel of this chart shows that momentum levels have improved from December while prices have continued lower. This difference between what prices are doing and the indicator is doing is a bullish divergence and can at times foreshadow a rally. This could be the time with earnings coming out this evening.