Zoom before Earnings
ZM (NASDAQ) the video conferencing software has seen rapid growth in recent months due to the pandemic and the need for social distance, the stock has grown 168.4% since the start of February. As earnings reporting is coming up very soon we will be taking a deeper look into how zoom is positioned prior to earnings reporting with Technical analysis.
The Aroon indicator works with two lines an Aroon up line in orange which measures the strength of the uptrend and the Aroon down line in the blue which measures the strength of a downtrend these lines will fluctuate day to day moving above and below each other. The Aroon indicator is used to determine the strength of the stocks up or down trend relying on the premise that strong up trends will see higher highs and strong downtrends will see lower lows. To find out how to capitalize on market lows read this. Readings of above 0 indicate an up tread and readings of below 0 indicate a downtrend. To keep it simple if the Aroon Up line crosses above the Aroon down line this indicates a bullish buying signal because it is the start of a new trend the strength of the trend would be determined by its reading above or below 0. If it is closer to 0 it is considered weak if it is closer to 100 the trend is stronger. Looking at Zoom chart we can see that the Aroon up line has crossed the Aroon down line indicating a Uptrend is possibly on its way although and it is very strong as the lines are very close to the 100% level.
The Moving Average Convergence (MACD) is a trend momentum indicator that shows the relationship in this case between the 12 day and 26-day moving averages. It is commonly used as a buy or sell signal if the MACD 12 day line in blue crosses the 26-day signal line in orange, It indicates a bullish buying signal. This is because of the shorter MACD 12 day moving average has diverged from the long term moving average and upside momentum is occurring. This is what has occurred in the above graph with Zoom pointing towards an a possible increase in price. However before you can use market insights to better your decision making its important first to learn how to trade.
There is clearly an increase in Volume highlighted by the vertical bars underneath the chart. Showing that trading activity among investors is increasing which normally means that a larger number of investors are buying the stock. With a higher than average trading activity the volatility of Zoom is likely to increase as well as a likely increase in the value of the underlying stock.