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Is Palantir Set to Break Out and Retest Highs?

Palantir looked prepped to break out on Friday. Technically it is, but not in the best of ways. You'll have to see the chart to understand it.

Palantir  (PLTR) - Get Palantir Technologies Inc. Class A Report continues to give investors hope on the long side. However, the stock is having trouble committing to the breakout.

Twice this week we’ve seen big upside rallies. However, those rallies have been short-lived as shares get sold from highs.

Earlier this week, Palantir was trading well, up four days in a row, before being downgraded to a sell rating by analysts at Citigroup on Wednesday. 

The stock opened lower that day, before rallying almost 5% and breaking out. Those gains didn’t hold until the close though, with Palantir ultimately closing lower by 2.6%.

In other words, a failed breakout. 

Then on Friday, shares caught another lift. This time it’s on news that Cathie Wood’s ARK Next Generation Internet ETF scooped up almost half a million shares

Woods' funds have nailed other stocks, such as Tesla  (TSLA) - Get Tesla Inc. Report and Roku  (ROKU) - Get Roku Inc. Report and even sent Virgin Galactic  (SPCE) - Get Virgin Galactic Holdings, Inc. Report surging earlier this week on news it intends to launch a space exploration ETF.

While the stock is up about 7%, Palantir did rally as much as 12.3% at Friday’s high. What now?

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Trading Palantir

Daily chart of Palantir stock.

Daily chart of Palantir stock.

From the chart, you’ll notice what I mean by “the stock is having trouble committing to the breakout.”

Wedge resistance (blue line) has kept a lid on the stock, while wedge support has continued to buoy it.

Most recently, support came into play on Thursday as Palantir was reeling from Wednesday’s failed breakout over resistance.

Friday’s action is encouraging, but the stock certainly isn’t out of the woods. On the plus side, shares are back above the 10-day and 21-day moving averages. Additionally, it’s over downtrend resistance, at least for now.

Palantir looked so promising this morning when it was clearing this week’s high and its VWAP measure at $26.50. Now below both measures, bulls need to show commitment to the upside or risk a move back below resistance.

If Palantir stock can hold up over $26.50 and clear $27.50, then Friday’s high at $28 could be back in play, followed by a potential move up toward the $29 to $29.50 area.

Above that zone puts the December high in play at $31.24, followed by the all-time high up at $33.50.

On the downside, bulls do not want to see Palantir lose last week’s low at $24.31.