This ServiceNow Bear Signal Has Never Been Wrong

ServiceNow Inc (NYSE:NOW) stock recently rallied from its April lows, but that recovery appears to be running out of steam near the declining 320-day moving average -- a trendline with historically bearish implications. This afternoon the shares are already trading modestly lower at $138.59, but more losses could be on the way, should this bearish trendline continue its streak.

Per Schaeffer's Senior Quantitative Analyst Rocky White, NOW has traded within 0.75 times the 320-day moving average's 20-day average true range (ATR), after spending at least 80% of the previous two weeks and 80% of the prior 42 trading sessions below the trendline. This setup has occurred three other times over the last decade, after which the stock was lower one month later every time, averaging a 6.9% loss. 

Analysts are overwhelmingly bullish on the equity, leaving plenty of room for a shift in sentiment to pressure the shares. Of the 45 brokerages in coverage, 40 carry a "buy" or "strong buy" rating, compared to just three "holds" and two "sells."

Lastly, NOW's Schaeffer's Volatility Scorecard (SVS) sits at 79 out of 100, suggesting the stock has tended to outperform options traders' volatility expectations during the past year.