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Palantir Earnings Preview: What the Chart Says Amid Bear Market

It's clear that growth stocks are trapped in a bear market. Will earnings help break Palantir out of its downtrend or will it accelerate the selling pressure?

Palantir  (PLTR) - Get Palantir Technologies Inc. Class A Report was up nicely from the session lows on Monday, but shares were still down about 4% ahead of the company’s earnings report.

Palantir is scheduled to report earnings on Tuesday before the stock market opens and investors are praying the report can turn around the company’s recent woes.

At Monday’s low, Palantir was down almost 60% from its highs in late January. More recently, the stock has been stuck in a painful rout.

If Palantir closes lower on the day, it will be the stock’s 10th consecutive day of losses. Shares have fallen more than 20% amid that decline.

The problem? Growth stocks are caught up in a painful bear market. We might have days left or months left and there’s no way to know for sure.

Roku  (ROKU) - Get Roku Inc. Report is one of the few growth stocks to bounce on solid earnings. However, DraftKings  (DKNG) - Get DraftKings Inc. Report, Pinterest  (PINS) - Get Pinterest Inc. Class A Report, Twilio  (TWLO) - Get Twilio Inc. Class A Report and many others have struggled after reporting.

Even Apple  (AAPL) - Get Apple Inc. Report has struggled despite its monstrous quarter. Will it be the same story for Palantir?

Apple is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.

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Trading Palantir

Daily chart of Palantir stock.

Daily chart of Palantir stock.

It’s not hard to see the recent carnage on the daily chart. You’ll notice that amid the current decline, Palantir stock has sliced right through the $21 level.

This level had been support for months, dating all the way back to December. Shares gapped down to this level shortly after hitting new all-time highs.

However, it ended up being a solid reversal, as shares quickly rebounded from this area.

Since then, $21 has been consistent support. The problem has been the trend. Each rally off support has been met with a lower high. That’s illustrated on the chart with blue arrows.

From here, I want to see Palantir reclaim $21 and the 10-day moving average.

If it can do that, then maybe we have seen the bottom. At the very least, it will give us a low to measure against.

Above $21 and the 50-day moving average is the stock’s next eventual resistance level. Notice how it has rejected Palantir stock since early April.

On the downside, the $15 level is on watch for potential support should we get there in the future. This was a key breakout area in the fourth quarter. While it seems far away, remember that this group is in a bear market and that can lead to deeper losses than many expect.