Zoom Video (ZM) has been a disappointment.
We looked at ZM on May 13 and recommended that "Some traders like to buy weakness. Other traders like to buy strength. Today I would buy the current weakness in ZM risking a close below $270."
ZM rallied, but the advance fizzled out in July and August. If you took profits into the strength you made money, but if you held on, then you were eventually stopped out in September.
Let's check on the charts again.
In this daily bar chart of ZM, below, we can see two downside price gaps that tell us that traders and investors are voting with their feet. ZM is trading below the declining 50-day and bearish 200-day moving average lines. The trading volume has surged on the downside gap days and the On-Balance-Volume (OBV) line continues to point lower. The Moving Average Convergence Divergence (MACD) oscillator is bearish.
In this weekly Japanese candlestick chart of ZM, below, we can see a weak picture, in my opinion. Prices are trading below the declining 40-week moving average line. Prices have broken old support from the middle of 2020 in the $250 area. The weekly OBV line is pointed lower because of aggressive selling and the MACD oscillator is bearish.
In this daily Point and Figure chart of ZM, below, we can see that prices have reached a downside price target in the $199 area. This does not mean it is a buy or that it will even bounce.
In this weekly close only Point and Figure chart of ZM, below, we can see a lower price target in the $128 area.
Bottom line strategy: The strategy is simple -- avoid the long side of ZM for now. A bottom will take a while to form. Do not be in any rush.
