ZM's 40-day moving average has helped launch the equity higher in the past
The shares of stay-at-home staple Zoom Video Communications (NASDAQ:ZM) are rising alongside the number of coronavirus cases in the U.S. and abroad, though the most recent bout of market volatility has the stock down 10.4% from its July 13 all-time high of $281. Additionally, the stock has found some resistance from its 10-day moving average. While steam seems to have been lost, a fresh surge may be on the horizon. This afternoon the stock is up 2.1% at $251.63, at last check, and looks to have pulled back to a long-term area of support.
The trendline in question is ZM's 40-day moving average. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, two similar signals have occurred during the past three years. Zoom stock enjoyed positive returns one month after each signal, and averaged a 43.1% gain. A similar move, from the security's current perch, would put ZM surged past all-time high territory on the charts.
Short interest is falling, down 12.6% in the last reporting period. The 11.52 million shares sold short represent an eyebrow-raising 35.8% of the stock's available float. In simpler terms, it would take just take one day to buy back these bearish bets.
Lastly, analysts are divided on ZM. Of the 21 in coverage, 11 rate it a "buy" or better, compared to the 10 remaining that call it a "hold" or worse. Meanwhile, the 12-month consensus target price of $226.96 is a 10% discount to current levels, meaning there is plenty of room for upgrades and price-target hikes in the near future.