Chart of the Week: ServiceNow
This week we’re going to be featuring ServiceNow, symbol NOW.
We’re going to do something a little bit different today. We’re going to look at three different charts on two different timeframes. The daily on two different charts and we’re going to look at the weekly on another platform, too, just to solidify our thesis here as why we like this stock for the long-term and even for the short-term.
ServiceNow is up 60% in three months
So you can see that the stock made a huge run from the bottom here in October, which came in at about $525 – 530. The stock’s up at $787 right now, so it’s up more than 60% in just under three months. And you can see the stock has made a nice run of higher highs and higher lows.
And actually what was nice here is that when it pulled back a bit towards the middle to end part of December, and then it broke out in the early part of January on some really good volume, it pushed above this 20 day moving average, which is the dotted line over here, on significant volume. You can see the volume trends over here were really solid. It got even more solid last week when the stock reported earnings. It did dip a bit following earnings, but as you can see here, it’s been on a torrential run for the past 3 1/2 weeks. And it soared on Monday of this week to a new all-time high at $787. This is a stock we like.
Indicators look strong
Now let’s take a look at it also on the indicators here. You see the MACD is on a buy-signal.
And I’ve introduced an indicator down here at the bottom, it’s called the on-balance volume. It’s really an accumulation of volume, and you can see from this timeframe at the end of October when the stock bottomed, it’s been just making higher highs and higher lows and it’s reached a really high level.
As Joe Granville, who created this indicator, once said, “When this indicator is moving higher and higher, it is extremely positive and bullish for the stock.”
On the Chaikin analytics – something that I follow every single day – we can see the stock is clearly bullish. It’s very bullish on their indicator over here. And you can see the power gauge down here on the bottom has been green since that bottom, no coincidence, at the end of October. It’s been making higher highs and higher lows.
Even though there’s a little bit of red here in the Chaikin money flow, it’s a little bit of a pullback because when the earnings came out last week, it did have some heavy distribution the following day, which means higher volume and the price going down. That is the definition of distribution. We see the overbought/oversold reading, which was super overbought, is now coming in a little bit over here.
We see relative strength is still strong versus the S&P 500.
Weekly chart looks like the daily chart: bullish
Let’s shift over to the weekly chart. This is using TrendSpider. You can see what I’m talking about here: It’s almost a carbon copy of the daily chart, which we see since the middle of last year. This is where the real strong buy signal occurred. And we can see that the stock has been making higher highs and higher lows as well too.
You can see the blue candles and the teal color on the candles. That’s the go-no-go composite of indicators system. It shows that when the candles are light blue, like it is right here, that’s a strong bullish condition. When it’s teal, it’s more cautiously bullish. But you can see the preponderance of candles since the middle of last year, have been light blue. So this has been in a bullish phase for almost nine months now.
Look at some of the other indicators over here. You can see the long-term Chaikin money flow – we saw the daily, now this is the weekly money flow – has been really strong and almost mimics the on-balance volume.
MACD is also on a buy signal, and over here, stochastics are overbought embedded, which means that pullbacks are being bought by the dip buyers.
Stock has room to move higher
All in all, we like ServiceNow. This stock’s got some room – probably up to $850, even $900 in the next two to three months. We’re long the stock, we’re going to stay with it for a little bit.
Now again, really really strong earnings last week when it got guided higher. Don’t know why the stock got beat up the following day. But still, people who sold the stock under $750 to $740 are having to pay for it today. That’s called being patient and waiting for the stock to move when it does well.
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