ZM: Anatomy of an Exploding Stock

Multiple buy signals create a stronger than average likelihood of a successful outcome on a trade.

When multiple signals occur within the context of a pattern buy setup, the odds are further enhanced in your favor.

Let’s take a look at a real time trade in ZM that Hit & Run subscribers took this week.

ZM saw an Earnings Explosion on February 3, which propelled it up the right side of a presumed 6 month Cup base.

We were not positioned for earnings. There was no edge — the successful pullback to backtest its 50 day line before earnings was only confirmed in the perfection of hindsight.

After the earnings rip, we stalked ZM, allowing it to consolidate and trade out an expected Handle to the Cup & Handle (a bullish pattern).

Last Friday, ZM started to turn up. On Monday, ZM left multiple buy signals and we used it as a long idea on Monday night’s Hit & Run Stock Report.

Let’s take a look at the multiple signals ZM left on Monday:

1) Monday saw an NR 7 Volatility Contraction Day… the narrowest range in 7 days. These usually see an expansion of volatility within a few days.

2) Monday shaped up as a TNT buy. This is a Thrust, Noise, Thrust setup. In other words, Friday saw a thrust, Monday was a sideways Noise or Pause Day, and the expectation was for another thrust on Tuesday.

ZM did not disappoint:

3) Monday, ZM actually carved out a new CLOSING 60 day high… not an intraday high, but a new closing high.

This is what I call a Peekaboo New High.

Taken together, these 3 signals in combination with the bigger picture Cup & Handle created a low risk/high reward setup.

ZM didn’t disappoint.

Hit & Run members took ZM long on an Opening Range Breakout on Tuesday at 95.65.

We sold the balance of our shares on Wednesday, banking a 4.95 profit on a 1 day trade.

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