Zoom Video (ZM) was last reviewed on October 21 where we wrote that, "If you own a stock that is up 10 fold in less than a year you need to calmly exhale and TAKE PROFITS especially when it is extended like ZM." With prices down sharply today it seems like a good juncture to review the charts again.
In this daily bar chart of ZM, below, we can see that our recommendation to take profits was well timed. Prices declined sharply into early November and then staged a recovery to the underside of the flat 50-day moving average line. Prices gapped lower today and we should soon see if the November lows will act as support.
There is not all that much price action below $400, in my opinion. The rising 200-day moving average line intersects around $280.
The daily On-Balance-Volume (OBV) line shows some weakness since late October which tells us that sellers of ZM have been more aggressive.
The Moving Average Convergence Divergence (MACD) is in bearish territory and trying to generate a decent cover shorts buy signal.
In this weekly bar chart of ZM, below, we see a picture where further declines could unfold. Prices show a peak then a selloff followed by a rebound. ZM is above the rising 40-week moving average line and prices were very extended above the line in October. Trading volume peaked at the end of August and the October high was made on diminished volume.
The OBV line shows weakness from October and the MACD oscillator has crossed to a take profits sell signal.
In this daily Point and Figure chart of ZM, below, we can see a potential downside price target in the $329 area.
Bottom line strategy: The overall feeling I get from these three charts (above) is that ZM could decline still further. A retest of chart support in the $300-$250 is possible. Avoid the long side until the dust settles.
