ServiceNow Plummets 3.26%: What's Fueling the Selloff?

Summary
• ServiceNow (NOW) trades at $148.2, down 3.26% from its previous close of $153.19
• RSI at 4.709 and MACD at -193.14 signal extreme bearish momentum
• GraniteShares 2x Long NOW Daily ETF (NOWL) plummets 6.77%, amplifying short-term pressure

ServiceNow’s sharp intraday decline has drawn attention as the stock trades near its 52-week low of $135.73. With a 7.07 million turnover and a 0.68% turnover rate, the selloff reflects a confluence of technical exhaustion and sector-wide weakness. The Application Software sector, led by Microsoft’s -2.3% drop, is under pressure as market participants reassess AI-driven growth narratives.

Bearish Technicals and Sector Weakness Drive ServiceNow's Sharp Decline
ServiceNow’s 3.26% intraday drop is anchored by deteriorating technicals and sector alignment. The RSI at 4.709—a level typically associated with oversold conditions—suggests extreme bearish momentum, while the MACD (-193.14) and its signal line (-153.50) confirm a deepening bearish crossover. The stock’s 52-week low proximity ($135.73) and a 85.68x dynamic P/E ratio, which exceeds its 52-week average, amplify selling pressure. Sector-wide, Microsoft’s -2.3% decline underscores a broader selloff in AI-driven software stocks, with ServiceNow’s recent acquisition activity and Guggenheim’s neutral rating upgrade failing to offset technical deterioration.

Application Software Sector Sinks with Microsoft Leading the Slide
The Application Software sector is in retreat, with Microsoft (MSFT) falling 2.3% as a bellwether for AI-driven growth stocks. ServiceNow’s -3.26% decline outpaces Microsoft’s selloff, reflecting its higher valuation multiple (85.68x vs. MSFT’s 32x) and weaker technical structure. The sector’s underperformance highlights a shift in risk appetite, with investors rotating into more defensively positioned tech names. Microsoft’s price action suggests sector-wide profit-taking, while ServiceNow’s breakdown below key support levels ($152.59) signals a potential continuation of the downtrend.

Bearish Positioning and Leveraged ETFs Signal Aggressive Short-Side Opportunities
• 200-day MA: $879.47 (far above) | RSI: 4.71 (oversold) | MACD: -193.14 (bearish) | Bollinger Bands: $1,220.62 (upper), $526.88 (middle)
• Key support/resistance: 30D ($152.59–$166.89), 200D ($901.95–$919.80)

ServiceNow’s technical profile screams for bearish positioning. The GraniteShares 2x Long NOW Daily ETF (NOWL) at -6.77% offers amplified exposure to the downtrend, while options traders should target high-leverage puts. Two top options from the chain:

• NOW20260109P139 (Put, $139 strike, 2026-01-09): IV 31.20%, Leverage 592.24%, Delta -0.079, Theta -0.000475, Gamma 0.021591, Turnover 801. High leverage and moderate IV position this as a top bearish play. A 5% downside to $140.79 would yield a $9.21 payoff (K - ST = $139 - $140.79 = -$1.79; max(0, $139 - $140.79) = $0).
• NOW20260109C147 (Call, $147 strike, 2026-01-09): IV 23.51%, Leverage 54.84%, Delta 0.598, Theta -0.5736, Gamma 0.075026, Turnover 89,208. High gamma and liquidity make this ideal for directional bets. A 5% downside would result in a $13.79 payoff (max(0, $140.79 - $147) = $0).

Short-term traders should prioritize the NOW20260109P139 for bearish exposure, while the NOW20260109C147 offers a high-gamma hedge. If $152.59 support breaks, the 2x leveraged NOWL ETF could accelerate the selloff.

Backtest ServiceNow Stock Performance
ServiceNow (NOW) experienced a significant intraday plunge of -3% on December 6, 2022, which was followed by a brief period of underperformance. However, the stock has since shown resilience and is poised for a potential recovery, supported by several key factors:1. Earnings Outlook: ServiceNow is expected to report earnings per share (EPS) of $2 for the upcoming quarter, reflecting a 36.99% increase from the previous year. This robust earnings growth indicates strong business fundamentals, which should provide a solid floor for the stock price.2. Revenue Expectations: The consensus for revenue is $1.93 billion, representing a 19.82% increase year-over-year. Healthy revenue growth is a positive signal for the stock, as it demonstrates the company's ability to generate more income.3. Analyst Estimates and Sentiment: Despite the brief downturn, analysts have not revised their estimates downward, which is a sign of optimism among professionals in the field. The PEG ratio of 1.9 is also in line with the industry average, suggesting that the stock is not overvalued relative to its growth prospects.4. Market Position and Innovation: ServiceNow's strategic partnerships and innovations in low-code development platforms position the company well for long-term growth. The company's focus on digital transformation and customer satisfaction is likely to yield positive results, supporting stock price stability and potential upside.In conclusion, while ServiceNow experienced a notable dip in December 2022, the company's strong earnings outlook, revenue growth, and positive analyst sentiment provide a foundation for a potential rebound. Investors should monitor the company's performance closely, especially in light of macroeconomic conditions and software spending trends, which have been headwinds for the industry

Bullish Bounce Unlikely Without Sector Reversal
ServiceNow’s technical exhaustion and sector alignment with Microsoft’s -2.3% decline suggest a continuation of the downtrend. The RSI at 4.71 and MACD divergence confirm a high-probability breakdown scenario. Investors should monitor the $152.59 support level and Microsoft’s price action for sector-wide clues. Aggressive short-sellers may target the NOW20260109P139 for amplified bearish exposure, while bulls should wait for a confirmed rebound above $166.89. Immediate action: Watch for $152.59 breakdown or a sector-wide reversal led by Microsoft.