ZM: Bargain or Bull Trap?

By Jani Ziedins | End of Day Analysis

Jan 13

Free After-Hours Analysis: 

It’s been a good couple of days for ZM. The stock bounced decisively off recent lows and gained 5.7% Tuesday and it added another 2.2% Wednesday. What’s not to like about that?


Every rebound starts by bouncing off of the lows and ZM has done a great job resisting another leg lower this month. I often say, “something that refuses to go down will eventually go up.” Unfortunately, that doesn’t apply to ZM here. In fact, this looks more like the mirror image, “something that hangs out near the lows long enough will eventually fall under them.”

Tuesday’s bounce was a good start, but Wednesday’s 2.2% gain was actually more bearish than bullish. That’s because the stock retreated from much higher levels earlier in the day. In the stock market, it’s now how you start, but how you finish that matters most. And in this case, rather than embrace the early rebound, regretful owners took the opportunity to sell these higher prices. Selling pressure every time the stock rallies tells us a large number of owners have given up and are looking for the best way to exit their positions. That’s never a good sign.

As far as the stock chart goes, even the last two days of gains cannot erase all the damage that’s been done. At the very least, the stock needs to get above $380 resistance and break above the larger downtrend. Until then, this remains a shockingly bad chart.

ZM will be a lot more interesting if it back above old support at $400. Until then, this is a no-touch (and a shorting opportunity for the most aggressive trader).

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About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.