For his "Executive Decision" segment of Mad Money Monday night, Jim Cramer spoke for the first time with Eric Yuan, founder and CEO of Zoom Video Communications Inc. (ZM) , the video-conferencing company. ZM shares rose 8% on Friday and another 8% Monday, but still remain down 16% over the past month.
Cramer reiterated his buy on Zoom Video but I want to review the charts again. We looked at the chart of ZM last week and concluded that "We do not have a lot of price history to lean on but there are enough subtle clues to suggest only holding a token position in ZM ahead of earnings." Indeed, prices have weakened.
In the updated daily bar chart of ZM, below, we can see that prices broke to the downside in recent days. The slopes of both the 20-day and the 50-day average lines are now negative (bearish). The level of trading increased and the On-Balance-Volume (OBV) line turned down signaling more aggressive selling.
The Moving Average Convergence Divergence (MACD) oscillator is in a bearish mode below the zero line.
In this Point and Figure chart of ZM, below, we can see that the software is now projecting a potential downside price target of $59.53.
Bottom-line strategy: ZM has broken to the downside and our indicators have turned bearish. Prices could hold in the $75-$70 area but the Point and Figure chart is projecting a retest of the April low.