Here’s how we’re trading Zoom Video (ZM) (May 17, 2019)


Let’s look at Zoom Video ( NASDAQ: ZM ) here. Speaking of Zoom ( NASDAQ: ZM ) this has been a real monster stock over the last few days and so I just want to go over the price action here.

IPOs trade much different[y than other stocks. The reason is, among other things, is there is just not enough price action to really give you good solid readings for support and resistance, there is just not enough data. So when you are trading something like this you have to have a little bit of imagination and tighten up your time frames. I other words, like this is a 10-day base, that’s not much of a base if you are looking at Microsoft ( NASDAQ: MSFT ) that’s just a little hiccup.

But here, on an IPO, think about the number of days that the stock has been trading. If this is the breakout on Thursday then the stock starts trading here prior to the breakout day, you’ve got 18 bars, 19 bars including the breakout day. So if you just want to look at the number of days where the stock has essentially been basing, it’s 10-days; 10 out of 18-days has been in a base. Guys, that’s over 50 percent, so 50 percent of the trading in this stock has been in a tight range in a base. Give me any other stock like that, 50 percent in a base that then breaks out on heavy volume, I will put the world in there, that will be a really, really solid breakout. And so you just have to kind of look at things a little bit different with an IPO but the action is actually the same. Boom! You buy the breakout.

Also, though, if you just look at an hourly chart, now you have more data, you can see more of what’s happening and it seems a little bit more volatile here. But I think a lot of that too is because you see the intraday stuff and during the middle part of the day that’s when stocks tend to not do a whole lot or they certainly don’t behave normally; because most of the buying or selling is done either at the beginning of the day like the first hour of trading or the last hour of trading. So you have to always be mindful of what you are looking at. Why does something look the way it does?

You can be day trading this thing with these tight intraday charts. But, frankly, for me on something like this, when this thing went above 80.00, I’m in, that’s my technical buy point and now I actually added a little bit today and I will be looking to add more on Monday if the stock continues to push through $90.00. A stock like this that comes down almost to $60.00 and pushes up to 90.00, I am thinking a “hundi”, that’s what I am thinking. I think this stock is going to continue to move but it has to show us that. I am not predicting, I am saying if the stock breaks out above, say, 90.50, maybe up to 91.00, I think you are going get $100.00 out of this trade.

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