There was right and then there was Palantir Technologies (NYSE:PLTR). But for tomorrow’s investors, today looks more and more like a great opportunity to buy stocks with more confidence. Let’s look at what’s going on out and on the PLTR stock price chart, and then come up with a risk-adjusted determination aligned with those results.
Big Data operator stocks have been everywhere since their IPO last fall. Some bullish Palantir investors rose as much as 65%. Yet other PLTR stock bears recorded similar gains of 62%. Timing is everything, but this kind of precision is also elusive.
And make no mistake about it, with stocks at a much more modest 7% rate and caught in the middle of a trading range that has spanned most of PLTR’s life as a publicly traded company, the price action has frustrated advocates and critics alike.
So what is driving investors and the volatile behavior of PLTR stocks?
Could conditions favor PLTR stock market bears?
The bears could lead the others to Room A and Palantir’s increasing losses. In May, that was a shortfall under GAAP of over $ 123 million for the first quarter and more than double the loss of nearly $ 55 million in 2020. It can’t go on forever, is isn’t it? And while PLTR is new to the aftermarket, the Denver-based company has been around since 2003.
Even investors excited about Palantir’s overall earnings and positive about PLTR’s long-term growth prospects are carefully watching the real world of the tech company, in red ink.
InvestorPlace’s Alex Sirois does a good job of explaining why the projected 30% eye candy sales growth through 2025 could quickly become too sweet for the well-being of investors if the growing net losses and the cost of PLTR revenue are not reduced.
Some clarity on this front is expected when PLTR releases its second quarter results in the first half of August.
Skeptics, and not to be overlooked, also took advantage of a more challenging environment in 2022 for growth stocks of PLTR’s caliber. Plain and simple, multiple squeeze amid concerns about interest rates and inflation along with fears of slowing economic growth has been a condition favoring the bears.
And since the initial dislocation in February as investors ditched growth narratives in favor of cyclical value-oriented stocks, this has been hit hard. From a diversified A to Z or rather actions like Airbnb (NASDAQ:ABNB) at Zoom video (NASDAQ:ZM), if misery loves society, PLTR stocks have a lot.
PLTR weekly price chart
Click to enlargeSource: Charts by TradingView
Make no mistake, future growth stories like PLTR stocks have taken him on the chin. More generally, evidence of this can be found in products such as the Innovator ETFs Trust – Innovator IBD 50 ETF (NYSEARCA:FFTY) and last year’s prodigy growth fund ARK Innovation ETF (NYSEARCA:ARKK).
Leading growth funds have remained largely out of touch with today’s blue chip market history, hitting near all-time highs and up double-digit for the year. Today, however, I’m optimistic that the market’s red-haired stepsister has seen her best days. And for PLTR bulls, it shows up well on the price chart.
Technically, Palantir shares have set up a fourth straight week of lows that challenge the area’s support between the 62% and 76% retracement levels of PLTR.
Compared to the pivot since the start of the year in May and given the generally favorable volume indications since the January high, the observation is that the PLTR stock is preparing to rally to the right side of a large base in cup or saucer shape. To maintain the bullish pattern of the setup, stocks need to bottom out shortly and maintain the support area. It could happen as early as next week on a confirmed reversal candlestick.
If PLTR stocks start to rally, the first logical test that also improves the durability of the base is a test of the 50% retracement line after the June pullback from the 38% resistance level. This offers around $ 9 profit on the minimum upside and possibly a lot more over time.
Compared to technical risk, Palantir offers an attractive buying opportunity. And with profits in August, a purchase could enjoy faster than normal gratification.
Nonetheless, and for investors wishing to intelligently preserve and grow their own results over time, I would suggest a fully hedged collar or bullish spread in September as the best strategies to deploy on a standalone PLTR stock position.
As of the publication date, Chris Tyler and / or accounts under management held long positions in Palantir (PLTR), ARK Innovations ETF (ARKK) and their derivatives. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.
Chris Tyler is a former ground-based derivatives market maker on the US and Pacific stock exchanges. The information provided is strictly intended for educational purposes. The use of this content is 100% the responsibility of the individual. For additional market information and related thoughts, follow Chris on Twitter. @Options_CAT and StockTwits.