ServiceNow Rally Could Be Imminent Despite Price Action Concern
The stock has been plunging since earnings last month but is approaching a spot where buyers might enter.
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A strong quarter and guidance from ServiceNow NOW was not good enough to propel the stock higher.
We are just as frustrated as you by this development, but are encouraged by the repeated bounces off support over the years. One is coming up shortly, that is a gap fill from April and another one from just the day before, so if NOW comes down any further, these would be ideal levels to add more shares ($813 and $766).
There's no question the chart action since late July is ugly. With the Nasdaq and S&P 500 hitting new highs this week, it stymies us to see NOW hitting four-month lows, but it is what it is. This is a high-quality company that is likely to turn more good earnings come October, but for now we are concerned about the current price action.
Stochastics (momentum) is at the bottom, which means a rally could be imminent. Money flow is poor and the parabolic SAR is bearish, candles are deep purple which also reflects bearish on the GoNoGo composite of indicators.
So, why buy anything here? This pullback seems to be a bit much for a strong name, so a little addition here might be wise. More at the gaps to the left.
We like ServiceNow in TheStreet Pro portfolio and rate it a one, buy at anytime.
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At the time of publication, TheStreet Pro Portfolio was long NOW.
