Looking for stocks with strong Relative Strength (not the Relative Strength Index or RSI) is one way of identifying stocks that can outperform. Let's check out the charts on NOW.
In this daily bar chart of NOW, below, we can see two trends. First is the mostly sideways trend from last May to the end of January. In February prices reacted strongly with an upside price gap and very heavy volume. This gap started the second trend - a strong uptrend. The uptrend got a booster shot last month with another upside price gap.
Prices are above the rising 50-day moving average line and well above the rising 200-day line.
The daily On-Balance-Volume (OBV) line has been positive the last 12 months - even when prices trended sideways.
The Moving Average Convergence Divergence (MACD) oscillator is not as positive as the two moving averages that make up the indicator are very narrow and look close to a take profits sell signal.
In this weekly bar chart of NOW, below, we have mixed signals. Prices are definitely in an uptrend and well above the rising 40-week moving average line. With prices up from $75 to $270 in three years we definitely have a reason to take some profits.
The weekly OBV line has not made a new high despite the fact that prices broke out to new highs more than three months ago. This is a bearish divergence.
The weekly MACD oscillator has narrowed and is close to a bearish crossover.
In this Point and Figure chart of NOW, below, we can see the fresh upside breakout and a price target of $302.
Bottom line strategy: NOW has certainly rewarded patient investors but a weekly bearish divergence from the OBV line and some "loss of vigor" from the MACD oscillator is telling us to raise stop protection to a close below $245 while $300 is our price target.