Let me tell you what we did here today. I actually sent out in my morning note that I was buying some Zoom Video ( NASDAQ: ZM ) because it was down on news on security issues and stuff like that.
I am not a fan of the company; I don’t know the company. This part of the chart; I love the chart back here but this seems really double toppy to me, this and this traded down. But I can’t resist a bull trap when I know that there is a lot of retail traders who are still fixated on this stock.
When this stock comes down and trades close to the 50-day moving average, that’s the kind of trade that, it’s not a long-term investment for me, but it would be a pretty good short-term trade. This is what I did; I posted this, this morning. I am buying the stock; I bought it, actually, a little bit below where it opened up pre-market.
And then if you look at the way this stock has traded, forget about the 1-minute chart, this is a 15-minute chart throughout the day. The stock immediately ran up and really never went back below the volume-weighted average price, only a little bit during the noontime; that is what stocks do.
Predators buy or sell, whatever the case may be, in the morning and right into the close. Prey are the ones that are active and buying during the middle part of the day; I am telling you, you are going to get hurt big time if that is what you are doing there.
This was my trade on Zoom ( NASDAQ: ZM ). I don’t expect it to run to new highs but it was a great day trade. Also, you look at this kind of volume, this is distribution volume, nice move off of the bottom but it didn’t even get up to Friday’s level.
This is, in my view, an oversold bounce. I wouldn’t really be in this stock, certainly if it starts rolling over tomorrow and ABSOLUTELY if it trades below the 50-day moving average. Nothing good ever happens below the 50-day moving average.
This is like the overpass; you’re driving on the freeway and you’re driving under an overpass and you look up to that little ledge that is right in between where the road is and where the hill comes down to the highway or the freeway. And you go like, wow, there is just about enough room in there for some bad stuff to happen.
The bottom line is if it is below the 50-day moving average that is not a stock that you want to be anywhere near, unless of course, it is for a little trade. That’s my take on Zoom ( NASDAQ: ZM ).
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