ServiceNow Inc. (NOW) was reviewed in early June, where I wrote that, "NOW longs may want to raise stop protection to $165 or even book some profits as we have enough technical reasons to be cautious for the near term."
Prices corrected lower into late June and have rallied the past two months to lightly higher highs. Our $165 stop was untouched so what should longs be doing now on this most "hidden" of the Cloud Kings discussed by Jim Cramer on Real Money.
In the daily bar chart of NOW, below, we can see that prices are above the rising 50-day moving average line. NOW is also above the bullish 200-day moving average line. The volume pattern is hard to read and the daily On-Balance-Volume (OBV) line has been neutral since March. The trend-following Moving Average Convergence Divergence (MACD) oscillator has turned up to a fresh go long signal.
In this weekly bar chart of NOW, below, we can see that prices are above the rising 40-week moving average line. The weekly OBV line shows a long rise from early 2016 but like the daily OBV line it has not made a new high for some time.
The weekly MACD oscillator is still in a bearish take profits mode but could turn up to a fresh go long signal depending on the price action.
In this Point and Figure chart of NOW, below, we can see a recent upside breakout at $196 and a new price target of $241.
Bottom-line strategy: NOW needs to see a new high in the OBV line but aside from that obstacle the charts are bullish. Investors should raise sell stops to a close below $170 and traders to below $175. The $240 area is our next potential price target.