Jeff Cooper’s Anatomy Class: ZM, A Case Study

Since coming out of a Cup & Handle in February as the quarantine hit, ZM has had a remarkable run to as high as the 220 region after reporting Tuesday night.

I had thought ZM was putting in a possible right shoulder of a Head & Shoulder topping pattern as it rolled over last week.

I got influenced by narrative about their security flaws and the prospect for their future in the U.S. given that all their engineers are in China, meaning that they faced similar issues to Huawei.

That may be true, but don’t tell me why, tell me when.

In this game, it’s critical to stick to your own knitting… the technical knitting.

In the above ASM, note that the 3 Day Chart turned down on May 1.

As well, that 3 Day Chart low coincided with a test of the rising 50 day moving average and a trendline for 2020.

ZM responded to the setup by rallying and turning its 3 Day Chart back up.

Importantly, the pullback into May 27 put ZM in my daily Plus One/Minus Two buy position.

In other words, the 3 Day Chart was pointing up and May 27 satisfied 2 consecutive lower daily lows.

The 3 Day Chart pointing up satisfies the criteria for the Plus One.

Two consecutive lower daily lows satisfies the criteria for the Minus Two.

As well, notice that ZM pivoted decisively off its 50 day line on May 27 and followed through to the topside with authority.

ZM was speaking.

W.D. Gann wrote that fast moves come from 3rd higher lows.

ZM was listening.

Using the Square of 9 to define an exit point gives the 216 region where ZM traded after reporting Tuesday night.

Why?

260 degrees up from the 149 May 27 low is 202.

Another 90 degree decrement higher is 216.

Trade back below 202 suggests lower prices and a possible short-term buying climax.

Blue is 149
Purple is 202 (360 degrees up)
Red is 216

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