- Palantir stock continues to trend higher with a positive Friday close.
- Relative Strength Index just creeps into overbought territory.
- PLTR keeps winning new contracts as it grows its customer base.
Palantir shares put in another solid week as one of the few stocks to close in the green on Friday as profit taking hit ahead of the weekend. Palantir shares closed at $26.78 on Friday for a 0.9% gain. The shares had started the week at $25 so solid steady progress. The Centre for Disease Control (CDC) recently announced it has renewed its partnership with Palantir in relation to disease monitoring and outbreak control. This adds to another recent win with the Federal Aviation Authority (FAA) selecting Palantir.
Thursday saw the announcement of an agreement with DataRobot designed to create unique, agile and real-time solutions to help solve the most pressing demand forecasting problems. Friday was a heavy volume day in Palantir but do not let this distract you. It was not due to a sudden surge of interest but due to the fact that Palantir was added to the Russell 3000 Index and the effective date is today, Monday, June 28. Friday’s close will have seen all those funds that track the Russell 3000 Index buying Palantir.
Palantir stock remains on course to fill the gap left from the previous earnings release back in February. The stock gapped down from $32 to $30 and set in motion a strong downtrend to $17 by May. Ironically, the release of the next results appears to have been one of the catalysts ending this downtrend, with PLTR finding strong support and beginning a powerful uptrend.
Palantir (PLTR) statistics
| Market Cap | $50 billion |
| Price/Earnings | 153 |
| Price/Sales | 43 |
| Price/Book | 31 |
| Enterprise Value | $40 billion |
| Gross Margin | 70% |
| Net Margin | |
| Average Wall Street Rating and Price Target | Hold, $22.43 |
While still a long way short of the January high of $45, Palantir has been trending nicely with the 9-day moving average guiding the trend. As long as the shares remain above this level, the trend and risk-reward remain skewed to further upside. Wednesday, Thursday and Friday have seen strong continuation candles with a higher high and higher low than the previous candle. The trend therefore is clearly still pushing higher. The next resistance is $27.47, this is the high from March 15. Breaking this level is where things can get interesting. The volume profile on the right of the chart shows just how much volume thins out as PLTR shares get above $28. Above $30, the volume shrinks to almost nothing as this corresponds with the gap on the price chart. This gap was caused by earnings on February 16. Markets love to fill gaps.
The risk-reward as stated remains skewed to the upside, but the Relative Strength Index (RSI) needs to be watched as it has just ticked into overbought territory. Some period of price consolidation would bring this back to neutral levels, but it does not mean a reversal is necessary.
Look to the Moving Average Convergence Divergence (MACD) indicator to break out of the long-term downtrend to confirm a further move higher in PLTR stock price. Friday has seen the MACD move very close to breaking the long downtrend line in place since December. Buying a $30 call option could be an interesting strategy should the price accelerate through $27.47 and aim for the gap from $30-32. Call options also offer built-in risk management as you can only lose the premium. If PLTR stock price accelerates through $30, then the call option becomes in the money, increasing its value. The increasing speed of the price move also increases volatility, which also increases the value of an option.
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