ServiceNow Is NOW Poised for a Breakout

 | Aug 31, 2017 | 1:05 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:


ServiceNow Inc (NOW) was covered back in late March, and we were cautious, saying that, "Price strength is needed to tell us the March correction is over. I would wait for a close above $90 to go long, risking to $83." It did not take long for NOW to close above $90 to get us back on the long side. Prices rallied into early June reaching $110 before starting another sideways consolidation pattern.

Recently buyers have returned to push up NOW to a fresh upside breakout. Let's check the latest charts and indicators to see what prices targets and reversal levels we should be watching.

In this daily bar chart of NOW, above, we can see that prices tested the rising 50-day moving average line in June, early July and earlier this month. All of the dips or tests were successful and prices are moving up and away from the rising moving average line. The slower-to-react 200-day has been pointed up since early November. The volume pattern looks like it became heavier since May as prices turned sideways. Heavier volume and sideways price action can mean that buyers of NOW are meeting an equal force from sellers and the chart isn't making much upside progress.

The On-Balance-Volume (OBV) line shows a rising trend from September to early June, telling us that buyers of NOW were more aggressive. Since early June, the OBV line has been neutral and prices have moved sideways to a touch higher. The Moving Average Convergence Divergence (MACD) oscillator has turned up from the zero line for a fresh outright go-long signal.

In this weekly bar chart of NOW, above, we can see that prices are above the rising 40-week line. The weekly OBV line looks much stronger than the daily one, above. Starting from February of 2016, the OBV line has shown month after month of aggressive buying. The OBV line in the four months looks stronger on this timeframe than the daily chart. The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since July of 2016 -- and it looks like it is poised for a fresh outright-buy signal.

In this Point and Figure chart of NOW, above, we can see two key features. First is that a trade at $116.52 will be a new high for the move up -- and a breakout generating a longer-term price target of $133.09.

Bottom line: It looks like NOW is making its move to new high ground. Approach from the long side risking a close below nearby support around $104 targeting the $130-$135 area.

Columnist Conversations

Activist investor Carl Icahn now holds an 6.86% piece of Newell Brands (NWL). The shares were trading...
Taking advantage of a non-dilutive change in Stitch Fix's (SFIX) float that is having a bearish impact on pric...
The net/net cupboards are empty these days, but this age-old investment technique which is not for the faint o...
I'm saddened to hear about the passing of former Real Money and Real Money Pro columnist Dick Arms. Dick was ...



News Breaks

Powered by
Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.