This ServiceNow Bear Signal Has Never Been Wrong

ServiceNow Inc (NYSE:NOW) stock has recently made a comeback from its April lows, but analysts warn that this rally may be nearing its end. The stock is now trading near the declining 320-day moving average, a trendline that has historically signaled bearish market sentiment. ServiceNow shares are currently trading at $138.59, but more losses could occur if the bearish trendline persists.

According to Schaeffer's Senior Quantitative Analyst Rocky White, NOW has traded within 75% of the 320-day moving average's 20-day average true range (ATR) over the past two weeks and 42 trading sessions. This pattern has occurred three times in the last decade, and each time, the stock ended up lower one month later, with an average loss of 6.9%.

Despite the bearish outlook, the overall sentiment towards ServiceNow remains overwhelmingly positive. Of the 45 brokerages covering the stock, 40 have assigned a "buy" or "strong buy" rating, while only three have a "hold" rating and two have a "sell" rating. However, this high level of bullishness may not be enough to prevent a potential shift in sentiment and a decline in the stock price.

ServiceNow's Schaeffer's Volatility Scorecard (SVS) stands at 79 out of 100, indicating that the stock has historically outperformed the volatility expectations of options traders over the past year.