For his Executive Decision segment of "Mad Money" Monday, Jim Cramer spoke with Eric Yuan, founder and CEO of Zoom Video Communications (ZM) , the video conference provider with shares up nearly 15% Monday on another strong quarterly report.
Yuan said the trend of people working from home continues and more companies are looking for a reliable, secure way to meet with their customers, suppliers and employees, and that's Zoom. Turning to the topic of the coronavirus, Yuan said Zoom has seen record usage in the past few weeks, partly because people are staying home.
I mostly work from home. so let's check out the charts of ZM while a fresh pot of my favorite coffee is perking.
In this daily bar chart of ZM, below, we can see the price action since its initial public offering (IPO) back in April. Prices rallied early but made a "round trip" by October and a retest of the October low in December. Prices got in gear on the upside from the early December low, rallying above the rising 20-day and 50-day moving average lines. The daily On-Balance-Volume (OBV) line turned up smartly in the last two months, telling us that buyers of ZM had turned more aggressive. The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in early January for an outright go long signal.
In this limited weekly bar chart of ZM, below, we can see a positive picture with prices above the 40-week moving average line. The weekly OBV line shows strength from October and the MACD oscillator gave a cover shorts buy signal on this time frame.
In this daily Point and Figure chart of ZM, below, we can see that a potential $123 price target has been projected after Monday's sharp rally.
Bottom line strategy: Monday's big high/low range is likely to be followed by some sideways price action. Aggressive traders could use this anticipated sideways movement to go long. Risk below $80 for now while looking for gains to the $120-$125 area in the weeks ahead.