Palantir (NYSE: PLTR) could be in for a turbulent end to the week. As of yesterdays close, the stock was below several primary support levels, which is a bad omen. Palantir has closed lower every day this week, losing almost 15% in the process. Subsequently, PLTR has fallen beneath the 50, 100, and 200-day moving averages and broken trend line support. The destruction is surprising, considering a week ago, Palantir was breaking out to the upside.
A confluence of negative factors has worked against equity prices recently. The major US indices finished September deep in the red under the threat of a US default and a hawkish Fed. Congress’s inability to reach a deal to raise the debt ceiling, combined with rising inflation, sent stocks tumbling to their worst month in a year. As a result, PLTR reversed its recent uptrend and is starting to break down.
The daily chart shows that Palantir punched through trend resistance on the 16th of September. After clearing the trend at $27.50, more upside looked certain. However, PLTR fluctuated on either side of the trend for the next week before heavy selling kicked in.
Palantir closed yesterday at $24.04, below the 100 DMA at $24.06, the 50 at $24.84, and most importantly, the 200 at $25.04. Furthermore, the price has lost the support of a rising trend line from the May low, signalling a complete breakdown. If PLTR fails to increase today, it will confirm the breakdown and compound the bearish outlook. On that basis, a weekly close lower than $24.06 will target the July low at $20.55. Furthermore, if the general market weakness persists, a steeper decline to May’s $17.06 nadir is possible. The bearish view relies on the technical breakdown, and therefore, becomes invalid on a weekly close above $24.06.
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