ZM - Falling Knife or Buy?
Stellar performance and a covid-19 pandemic hero, Zoom has had mind-boggling performance in 2020. However since the vaccine news are out and the world tries to return to normal the stock has lost steam.
This poses the question, is stock a story of the past or is it a buy-the-dip situation?
Well from a valuation perspective and if we believe the analyst consensus the stock should be valued at around $469 (+20%). However, a closer look at the ratios supporting this thesis I can only find very little sense of buying the stock. But this seems the case for many stocks these days. So my personal conclusion would be, this is a stock to swing trade and not for investing.
What I am looking at;
* The stock only started significantly moving in March 2020, so this is my time frame
* On this timescale the Fibonacci retracement levels (esp. 78% and 61%) have shown significance in support and resistance
* The stock is was approaching the 50% Fib levels in Jan, which coincides the gap higher following Aug 2020 earnings, and is reversing since towards the 61% level
* Price seems to have positively broken a convergence of the longer-term uptrend and the correction that started in October 2020
* MACD seems to have bottomed out showing a bullish reversal trend forming
* RSI is in the 50 levels, i.e. in neutral territory
* On the upside I see resistance around $430 (R1), $470 (R2) and $500 (R3) . Personally I believe R2 is achievable, however R3 and new all time highs won't be unless something changes materially.
I will be looking to trade the stock pre March earnings release;
Buy Limit $395
SL $370
TP $469 (Analyst est.)
***The comments above are my personal view and do not represent investment advice. Risk management is key, do not trade what you cant afford to loose***
This poses the question, is stock a story of the past or is it a buy-the-dip situation?
Well from a valuation perspective and if we believe the analyst consensus the stock should be valued at around $469 (+20%). However, a closer look at the ratios supporting this thesis I can only find very little sense of buying the stock. But this seems the case for many stocks these days. So my personal conclusion would be, this is a stock to swing trade and not for investing.
What I am looking at;
* The stock only started significantly moving in March 2020, so this is my time frame
* On this timescale the Fibonacci retracement levels (esp. 78% and 61%) have shown significance in support and resistance
* The stock is was approaching the 50% Fib levels in Jan, which coincides the gap higher following Aug 2020 earnings, and is reversing since towards the 61% level
* Price seems to have positively broken a convergence of the longer-term uptrend and the correction that started in October 2020
* MACD seems to have bottomed out showing a bullish reversal trend forming
* RSI is in the 50 levels, i.e. in neutral territory
* On the upside I see resistance around $430 (R1), $470 (R2) and $500 (R3) . Personally I believe R2 is achievable, however R3 and new all time highs won't be unless something changes materially.
I will be looking to trade the stock pre March earnings release;
Buy Limit $395
SL $370
TP $469 (Analyst est.)
***The comments above are my personal view and do not represent investment advice. Risk management is key, do not trade what you cant afford to loose***
Trade active
Trade closed: stop reached
SL triggered in yesterdays sell off. $370 levels seem to have acted as support.
Will not buy back in for now and see how the stock develops.
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