Palantir Technologies Inc (NYSE:PLTR) continued to trend on r/WallStreetBets on Monday despite the stock tanking over 40% since the Nov. 8 high of $27.11 and about 65% from its Jan. 27, 2021 all-time high of $45.
The data analytics company landed hundreds-of-millions of dollars in contracts in 2021, including an $823 million agreement to deliver the U.S. Army’s Intelligence data fabric and analytics foundation for the Capability Drop 2 program, announced Oct. 6, 2021.
The market has not been kind to Palantir despite an abundance of positive fundamental news, and short interest in the stock has been increasing. Of Palantir’s massive 1.57 billion share float, 91.32 million shares are held short. The number is up from 81.7 million in November.
Insiders and institutions, however, show confidence in the stock over the long-term. Palantir has 44.56% of its float locked up, with insiders owning 12.48% of the float and institutions an additional 32.08%.
Palantir may be setting up an opportunity for both short-term and long-term investors to take a position in the stock going into 2022, although it should be noted Palantir has become known for its bull traps. Traders and investors should remember that any stock can always go lower.
The Palantir Daily Chart: On Monday, Palantir fell over 6% at one point before bouncing up toward the $16 level. The fall paired with the bounce appear to be in the process of printing a hammer candlestick in the stock.
- A hammer candlestick is often found at the bottom of a trend and can indicate a subsequent bounce is in the cards. If the candlestick is recognized, Palantir may trade higher on Tuesday.
- In order to make the first move toward bucking its daily downtrend, Palantir will need to rise up above Friday’s high-of-day at $17.33 and/or not fall below Monday’s low-of-day at $15.35.
- Palantir has multiple gaps above on its chart, with the closest gaps falling between $16.30 and $16.48 and $23.64 and $23.95. Gaps on charts fill about 90% of the time, which makes it likely Palantir will trade up into the ranges in the future.
Palantir’s relative strength index (RSI) dipped into oversold territory on Monday, which can be a buy signal for technical traders. When Palantir’s stock became technically oversold on Dec. 6 the stock rose up 11% over the following three trading days.
- Palantir has resistance above at $16.29 and $17.84 and support below at $14.58 and $13.18.
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The Palantir Weekly Chart: Palantir is trading in a confirmed downtrend on the weekly chart, which makes it a risky stock to enter.
- Conservative traders may want to wait for a weekly trend change to take place before entering a position, while more aggressive investors may choose to take a position if the hammer candlestick on the weekly chart continues to hold throughout the week.
- Palantir’s RSI is also registering into oversold territory on the weekly chart. Palantir’s RSI has never fallen this low on the timeframe, and investors may want to wait to see how the stock reacts before entering.
Photo: Courtesy of Cory Doctorow on Flickr