A sell-side firm started ServiceNow (NOW) coverage with a buy or overweight recommendation with a $ 600 price target. In our review of NOW on April 22, we recommend that “NOW may continue to rebound further in the short term but at great risk that we are looking at a large leading pattern remains. I will remain on the sidelines.” Let’s check and see if anything has changed for the positive.
In this daily bar chart of NOW, below, we can see that prices continue to weaken after our review on April 22. Prices have recently started to show some stability and the indicators we favor shows some green shoot. NOW is still on the downtrend and trading below the declining 50-day moving average line. The slope of the 200-day moving average line turned negative in early April.
The On-Balance-Volume (OBV) line dropped from late December to mid-April and is now showing some stability. The 12-day price momentum analysis shows higher lows from January to April to May and gives us bullish divergence when compared to price action.
In this weekly Japanese candlestick chart of NOW, below, we can see some positive developments. Although prices are still on the downtrend, we can see that the two most recent weekly candlesticks are showing lower shadows telling us that traders are starting to decline lows.
The weekly OBV line is still pointing lower while the slow stochastic indicator is signaling an oversold buy signal.
In this daily Point and Figure chart of NOW, below, we can see the upside price target in the $ 555 area.
In this weekly Point and Figure chart of NOW, below, we can see the downside price target in the $ 217 area.
Bottom line strategy: Aggressive traders can check the long side of NOW at current levels and raise purchases by more than $ 450. The $ 550 area is our price target right now. Risk closing below $ 401.
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