Why We Took ZM Long in the Midst of Friday’s Blood Bath

On Friday ZM setup as a solid risk to reward long.

I recommended subscribers take it long on the Hit & Run private Twitter feed.

In keeping with my Trim & Trail approach, we sold half the first position for a 4.30 gain, with a protective trailing stop on the 2nd half getting hit profitably.

We reloaded at 137 late in the session, trimming half at 138.56.

Here’s are the 3 factors for the setup:

1) In carving out 3 consecutive lower daily lows on Friday morning, ZM turned its 3 Day Chart down.

We use the 3 Day Chart to help determine the Line of Least Resistance.

At the very least, even if an item is going lower, a turn down in the 3 Day Chart usually (not always) gives a knee-jerk reaction higher first.

2) Likewise, ZM was approaching its rising 20 day moving average.

3) ZM also satisfied a 360 degree decline from its 181.50 all time high at 132.

In other words, 132 is a full revolution in price or a full ‘square’ down from 181.50 on what is called a Square of 9 Wheel.

While legendary trader W.D. Gann did not have a physical Square of 9 Wheel (as one was not discovered in his voluminous research after he passed), he did leave charts with pin-holes in them, indicating he did use the Principle of Squares to measure share price fluctuation.

Finally, ZM put in a potential 3rd higher low measuring from its early February impulse.

Often fast moves start from 3rd higher lows.

Putting the pieces together, ZM showed a Combo buy setup.

You can’t always be buying breakouts. You have to be able to pinpoint pullback entries.

In volatile markets, oftentimes big institutions will sell into strength.

Indeed, often they will ‘Buy ‘em to Bang ‘em.’

In other words, they will intentionally break an item out to sell into it as players chase it.

My dad was a great tape reader. One lesson he continually drilled into me was that “stocks don’t move, they are moved.”

ZM may have its sights set on an open gap above in the 151 region.

Pos ZM

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