How do you trade a broken chart? Try this tactic on Zoom Communications ($ZM). (September 10, 2019)


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I want to look at Zoom Communications ( NASDAQ: ZM ) here; the reason is that I think this is setting up for a quick pop here tomorrow. You can see why three days on increasing volume, three days of big declines with yesterday being really kind of a climax low. The prior day, which is Friday saw the most volume but yesterday more selling, huge volume, just not quite as huge as Friday.

So then today we see this kind of a reversal on heavier than average volume but look, we’ll just call it average volume. I would feel a little bit stronger about it if volume was huge on this move today because it would tell me that buyers were really swooping to buy this. But what I like is that the stock gapped down to open at 77.00 and Friday’s low was 77.20 but we will call it 77.00. So basically the stock actually gapped down a little bit lower than Friday’s intraday low and then rallied higher. Off the bottom, it was almost a 5 percent run.

I think you can buy this stock tomorrow morning. If you want to be conservative wait for the stock to move above 81.22, which is today’s intraday high and then look for a few points. I don’t know if it will be a big move or not, we don’t know. But you can look for that kind of move.

On the other hand, if the stock happens to gap down, which sometimes these things do, sometimes these stocks will gap down, they will gap down here, like, oh my gosh, it’s going lower. But then the selling quickly abates, and then the stock starts moving higher.

So I want you to watch Zoom ( NASDAQ: ZM ) tomorrow. It would only be an oversold bounce, that’s really the only trade that I see. It’s a broken stock, but it is kind of like it’s too broke and so I would look for kind of a return here, a retracement.

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