Back on May 10, with Zoom (ZM) trading at 291.91, we discussed looking for a signal of downside exhaustion, recalls Mike Paulenoff of MPTrader.
We said, "...Unless it rallies and chews through key resistance at 305-312, the set up argues for a press into the 275 area, from where I will be looking for a signal of downside exhaustion."
As it turned out, the very next day, May 11, ZM plunged to 273.20, bounced, and then retested its low of 275.80 from May 13 before pivoting to the upside into a climb that hit a recovery rally high at 329.45 Friday.
My near-term pattern work can make a compelling argument that the upmove from 273.20 to 329.45 (20.6%) exhibited bullish form. If accurate, this also means that ZM likely completed a major correction from its October 2020 high at 588.94 to the May 2021 low at 273.20 -- a 54% decline—and has initiated a new bull phase.
From a big-picture perspective, as long as any acute weakness is contained by the 273.20-275.80 low-zone, my work will be friendly to a forthcoming bottoming process in ZM.
My suspicion is that after a protracted and deep seven-month corrective period, that ZM will have to gyrate within an arduous 4-6 week bottoming period beneath heavy resistance from 340 to 350 prior to confirming a bottom that triggers intermediate term buy signals.
Bottom Line: As long as 273.20-275.80 remains viable support, weakness into the 300-305 area, and again at 280-285, are considered buy zones ahead of forthcoming next advance to 380-400.
Mike Paulenoff is the author of MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking.