You Ask, We Analyze: What The Bulls Need To Regain Control Of Palantir Stock

On Tuesday evening, Benzinga asked its Benzinga Pro community which tickers they’d like analyzed. From the replies, Benzinga selected one ticker for technical analysis.

Pro user BrooklynSteez wanted to see technical analysis on Palantir Technologies Inc PLTR.

Palantir sold off almost 10% following its third-quarter earnings print, despite posting a slight beat. The general markets have had a magnet to Tesla, Inc TSLA recently, rising significantly during Tesla’s multi-day rally and falling in sympathy on Monday when Tesla closed down 11.99%.

Palantir has been a top-trending stock with retail traders on r/WallStreetBets but the company may be falling out of favor with institutions. On Wednesday morning, RBC Capital downgraded Palantir to Underperform and lowered its price target to $19.

Institutions have also been heavily increasing their short positions on Palantir. Although only 4.75% of the total number of Palantir’s massive 1.52 billion float is held short, the number of shares the percentage represents equals 80.18 million, which is up from 54.49 million in September.

See Also: How to Buy Palantir Technologies Stock

The Palantir Chart: On Tuesday, the bears were able to force Palantir to close under a key ascending trendline that has been acting as support since Oct. 21, 2020. If the bulls are unable to regain the trendline as support, in the very near future it is likely Palantir will fall further as stop-losses are reached.

The decline in Palantir’s stock took place on huge volume, which also indicates the bears are firmly in control. On Tuesday, a massive 117.54 million shares exchanged hands compared to the 10-day average of 41.74 million. Bulls will want to watch for decreasing volume and sideways consolidation, at least on lower timeframes, before considering a position.

Palantir’s moving average convergence divergence indicator (MACD) may be another warning sign for the bulls because the MACD has curved steeply downward and looks as though it may be set to cross below the signal line. When the MACD completes a crossover it indicates a change in trend is likely to occur and, in this case, it could indicate a downtrend is in the works.

Palantir is trading below the eight-day and 21-day exponential moving averages (EMAs), but the eight-day EMA is still trending above the 21-day, which indicates indecision. If Palantir is unable to trade back up above the EMAs in short order the eight-day will cross below the 21-day, which would be bearish.

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• Bulls want to see sideways consolidation on low volume and then for big bullish volume to come in and push Palantir back up above the ascending trendline. The stock has resistance above at $25.58 and $26.61.
• Bears want to see sustained big bearish volume drive Palantir down below the $24.13 mark. If the stock is unable to hold the area as support it could fall further toward $23.27.
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