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Palantir Stock Falls. To Buy the Dip, Here's the Support Level to Watch

Palantir stock had a good run and now is getting whacked. Let's look at where bulls may consider buying the dip.

It’s not a good day in the stock market, with the Nasdaq down more than 2.5% and the S&P 500 down 2%. 

It’s even worse for the Denver software specialist Palantir  (PLTR) - Get Palantir Technologies Report, which is down more than 5% on the day.

The S&P 500 is nearing its first 5% correction in several quarters due to Monday’s drop, which comes on the heels of the China Evergrande news.

With China Evergrande presenting a large risk within the Chinese real estate market, investors are worried about potential systemic risk. Hence, the selling pressure in U.S. stocks.

While the threat could grow in the days and weeks ahead — some are calling this China’s “Lehman Moment” — others aren’t as worried about it.

As it pertains to Palantir, nothing specific is weighing on the stock on Monday. But high-growth stocks are under pressure as they generally have sharper volatility vs. the general market. 

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That said, its technicals have been pretty impressive lately. Let’s look at the charts.

Trading Palantir Stock

Daily chart of Palantir stock.

Daily chart of Palantir stock.

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Except for early May, Palantir has done a great job of holding the $21 level. It did so in July before slowly but surely beginning a new uptrend.

The shares eventually reclaimed the major moving averages but struggled with the $25.50 level.

Near the end of August, however, Palantir stock broke out over this mark and then found it as support after struggling with the $27 level and the third-quarter high of $27.50.

Despite the market’s overall weakness leading up to Monday, Palantir has been pretty impressive. 

Coming into the week, the S&P 500 was down in eight of the prior  10 sessions. During that same stretch, Palantir stock was up in eight of 10 sessions.

Further, Palantir finished higher in 13 of the 16 sessions leading up to Monday.

Now with the stock holding the $27 area and the 10-day moving average, aggressive Palantir bulls are likely buying the dip today.

While the stock isn’t displaying much relative strength on Monday, it has for much of the past few weeks.

A move back over $27.50 — the third-quarter high — puts the September high back in play at $29.29. Above that and $30-plus is possible, with a notable gap still left to be filled at $31.34.

On the downside, a break of Monday’s low that’s not quickly reclaimed could put the $25 to $25.50 area back in play, along with the 200-day moving average and uptrend support (blue line).