On Wednesday, Palantir stock (NYSE: PLTR) surged 7.4% intraday after winning an $823m contract before paring the gain to a paltry 1.6%. PLTR looked sure to finish the day with a healthy advance and above the significant $25.00 level. However, despite US stock indices surging following the debt-ceiling deal, Palantir came under heavy fire, finishing the day below several key technical levels.
On Tuesday, the news it had won the data analytics contract sent Palantir Technologies soaring almost 14% after-hours to $26.44. However, PLTR started the official trading session on Wednesday at $24.91, reaching a high of $25.01, before sellers drove the price down to $23.35, closing the day out at $23.58 (+1.59%). As a result, Palantir dropped back out of its uptrend, falling below the 50,200 and 100-day moving averages. Subsequently, PLTR looks vulnerable again.
The daily chart shows that Palantir has been trending higher in a rising parallel channel since May. During last week’s equity rout, PLTR dropped out of the trend channel, extending to a two month low of $23.02. The former trend support at $24.64, combined with the significant moving averages, make for effective upside resistance. The 100 DMA at $24.26, the 200 at $24.96 and the 50-day at $24.99 reinforce the negative outlook. As long as PLTR remains below $25.00, the path of least resistance is lower.
Below the market, the August $23.02 low is the first level of resistance. Should the price fall below $23.03, a test of the July $20.55 low is likely. In summary, the technicals suggest a bearish outlook below $25.00. However, if PLTR reclaims the rising trend and the moving averages, it invalidates this view.
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