PLTR Has Reached Key Upside Levels: Tighten Stops

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Primary Chart: Palantir Technologies Inc. NYSE:PLTR on a daily time frame with key Fibonacci Levels drawn as well as support, resistance, the 21-day EMA, and a critical VWAP from the bear-market lows of December 2022

Palantir Technologies Inc. NYSE:PLTR, once a tech darling of the 2020-2021 bull market in equities, has achieved a substantial retracement now of its vicious 2021-2022 bear-market decline. PLTR has been a popular stock ever since going public via a direct public offering, the same type of registered share offering used by and Slack Technologies, LLC, which is now owned by Salesforce. PLTR provides data-analysis and AI technologies to large government agencies, including defense agencies and branches of the military, as well as large corporations.

Despite periods of consolidation—especially from August 1, 2023, to November 1, 2023, PLTR has been in a primary-degree uptrend since its bear market low on December 27, 2022. The uptrend has been mostly strong and supported by the volume-weighted average price anchored to the bear-market low (green), which is shown on the Primary Chart above.

Price has also run into a major long-term Fibonacci level at $20.74. This level is also shown on the Primary Chart in gold. Using a logarithmic scale, this Fibonacci level at $20.74 is a 61.8% retracement of the all-time high to the December 2022 low. Above this level suggests more upside. Below this level suggests either (i) consolidation, or (ii) resumption of the downtrend (if key long-term support levels break decisively).

When plotted on a linear chart, PLTR has also reached (and stalled at) a critical Fibonacci retracement of its entire bear-market decline. This .382 Fibonacci retracement at $20.85 is often where bull flags or bear flags consolidate within a given trend. Some might view this level as a decisive level for the bbear case given that 38.2% of the bear-market decline has been retraced, and therefore, rising above this level would suggest the uptrend has further to climb (e.g., $25.46 at the 50% retracement shown in green below). So this level at $20.74 / $20.85 (whether viewed as a .618 Fibonacci retracement or a .382 Fibonacci retracement) is crucial to monitor.

Supplementary Chart A

This post argues that the primary uptrend looks as though it has become extended. Does this mean the high has been reached for the this particular uptrend? It's not wise to call the end of a primary trend until technical confirmation has occurred. Picking a long-term high is nearly impossible. The negative divergences on weekly and daily time frames are shown in the following charts:

Supplementary Chart B

Supplementary Chart C

Supplementary Chart D

Supplementary Chart E

Supplementary Chart F

So momentum has definitely slowed in this AI / tech / data-analysis name, and negative (bearish) divergences have arisen. At a minimum, this could signal a period of consolidation lies ahead in the first half (1H) of 2024. The supplementary charts show the divergences one should watch carefully. This may provide a reason for bullish position traders and investors to tighten stops. And if key levels snap decisively, such as the $16.36 level or the August 2023 supports at $13.68 or the VWAP (green) from December 2022, then watch for a retest or break of lows.

注释

Today, PLTR completed a measured move down from its YTD high of $21.85 on November 21, 2023. Coincidentally, this measured move zone ends right at the gap from November 2, 2023. This gap and measured move area has served as initial support. Although the daily candle has not yet closed, it appears to be a bullish hammer-type candle with a long lower shadow that formed outside the daily Bollinger Bands, and this has the potential represent a short-term low, i.e., a low for a bounce into the year-end.

In short, the retracement from the YTD high has completed a measured move at the zone from $16.20-$17.08. Bulls will want to vigorously defend this area as well as the gap that has also provided support here. Bears will want to see this break, and may have a tough time as long as this holds as support into year end.

注释

Since the publication date for this post, PLTR has fallen over -10.6% to its recent low at $17.05. The same day as this swing low occurred, December 6, 2023, SquishTrade provided an update noting that price had reached a measured move zone which could serve as initial support and serve as a short-term low for a bounce into year end. PLTR has risen a bit over +7% off this measured-move low at $17.05. Today so far, price is contending with the resistance level at $18.00 - $18.20. Near-term support continues hold strong at $17.05-$17.10.

注释

PLTR has pulled back about 5.7% from its intraday high earlier this week of $18.28. Yesterday's update noted resistance occurring around $18.00-$18.20.

Broader equity markets have been supported this week, but they have not been trending strongly. SPX has been chopping around the 4600 level as FOMC meets this week. GammaLabs reported in its morning briefing as follows:

"The massive gamma imbalance will continue to restrict the free movement of the SPX until Friday when about 400M worth of gamma (see below) will expire, and we think a range between 4,600 and 4,650 seems plausible - unless Powell is putting rate hikes on the table aggressively, which we doubt."

If SPX remains pinned into Friday, then it wouldn't seem unlikely that PLTR remains range bound between $17 and $18, unless Powell somehow says something that catches the market off guard or otherwise causes surprise. Some commentators say that Powell's speeches have caused more volatility than past FOMC chairs, a phenomenon mostly attributable to his tendency for misspeaking, vagueness, inconsistency. Wouldn't it be more stable if the FOMC simply prepared a statement after each meeting and left it to the written word without a presser? It was that way at one point in the past if I recall correctly.

注释

Since the intraday high on November 21, 2023, PLTR has sold off about –27%.

Since the applicable close on the date of this post's publication, PLTR has fallen –16.4%.

The measured move down equals $14.35 (with a low in the measured-move zone down to $13.04). The anchored VWAP support lies at $14.13. So there is a confluence of support. Any bearish traders may be watching this VWAP mean around $13.00 -$14.35 as a target.

One problem for bullish traders and investors trying to buy the dip is that PLTR has shown no sign of letting up. No divergence has appeared on the weekly, daily, 4-hour, 2-hour or even 1-hour RSI chart. Instead, new RSI lows appear. While a divergence does not have to precede a reversal on the current degree of downtrend, divergences offer us clues about the rate of momentum.

Resistance in the current downtrend remains at $18.50-$19.00. Support is now at $13.04 - $14.70.

注释

After the original thesis for this post played out well with a dramatic correction, PLTR is finding initial support at the midpoint of its upward sloping channel.

The mid-point of the channel could be monitored by those following this name. The blue line at $14.35 shows the start of the a measured-move zone, a spot where retracements in a larger-degree uptrend can find a low. The larger-degree uptrend in this case is from major December 27, 2022 low. The green VWAP anchored to that low shows that the primary uptrend remains intact for now despite a significant intermediate-term downtrend / retracement.

Keep an eye also on that green VWAP which shows confluence with the measured-move zone discussed.

注释

PLTR has remained choppy the last several weeks. It hasn't undercut its January 5 low yet, but it hasn't trended strongly higher either if you look at all the price action collectively since the new year began. Yes, today was strong with a 4.23% gain. But so was January 29 with a 4.53% gain, which was followed by weakness.

PLTR had held above the green VWAP anchored to its lows and below the red VWAP anchored to the recent swing high in November 2023.

PLTR has been attempting to hold within range of the mid-line of its parallel channel. This isn't a magic line. It's just something to watch until price no longer feels stuck around it.