Don't Sweat ServiceNow Stock's Pullback Just Yet

ServiceNow stock has lost more than 9% already in 2022

Deputy Editor
Jan 5, 2022 at 2:10 PM
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It was a notable year for ServiceNow Inc (NYSE:NOW), which charged to a record high of $707.60 in early November, and still sports a 10.5% year-over-year lead. However, the equity has already lost over 9% in the first week of 2022 alone, and was last seen down 2.5% to trade at $588.50. Though the reason for the recent negative price action is unclear, traders shouldn't panic just yet, as the pullback put NOW back within striking distance of a historically bullish trendline.

Specifically, the stock is back within one standard deviation of its 260-day moving average after trading above this key trendline since June. Over the past three years, there have been three similar pullbacks for ServiceNow stock, after which the equity was higher one month later 67% of the time, averaging a gain of 5.1%, per data from Schaeffer's Senior Quantitative Analyst Rocky White. From the stock's current perch, a similar jump would put NOW just shy of $619. 

NOW Chart Jan 5

ServiceNow stock could be gearing up for a short-term bounce. This is  per its 14-day relative strength index (RSI) of 39, which sits right on the cusp of "oversold" territory. 

For those looking to buy options on NOW, this may be the time to do so. The stock's Schaeffer's Volatility Scorecard (SVS) ranks at 89  out of a possible 100. This means the stock has tended to outperform options players' volatility expectations recently -- a good thing for buyers. .  

 

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