Palantir Hit a Record High This Week. What Do Its Charts Say?Palantir Technologies NYSE:PLTR reached a new all-time high this week as the tech firm continues to enjoy a month-long rally that began on Sept. 9 after S&P Dow Jones Indices announced plans to add it to the S&P 500. What does technical and fundamental analysis say might happen from here?
Regular readers might recall that I wrote about PLTR some two months ago, when the big data/artificial intelligence software firm’s stock was trading at about $27 following its Q2 earnings release.
Palantir was showing potentially bullish technical patterns then, which turned out to be accurate given that the stock topped $40 a share this week. (Disclosure: I was long PLTR when I wrote about the company in August, but do not own any shares as of this writing.)
Let’s see what Palantir’s fundamentals and technicals look like now:
Fundamental Analysis
Wall Street expects Palantir to release its Q3 earnings on or about Nov. 1, and analysts’ current consensus calls for $0.09 adjusted EPS (GAAP EPS: $0.04) on $703.7 million of revenue. That would be good for year-on-year earnings growth of 29% on revenue growth of 26%.
In fact, all 11 sell-side analysts that cover Palantir have increased their earnings estimates since Q3 began.
Meanwhile, PLTR has recently enjoyed several seemingly positive fundamental catalysts:
-- The company officially joined the S&P 500 on Sept. 23. Such a move historically helps a stock because S&P 500 ETFs and index funds all have to buy shares.
-- PLTR last week unveiled "Live Edge," a new product it developed in partnership with Edgescale AI. Live Edge is designed to enhance physical AI capabilities to help bring artificial intelligence to manufacturing, utilities and other complex industrial sectors.
-- Palantir announced on Sept. 25 a multi-year, multi-million-dollar extension of its enterprise deal with APA Corp. NASDAQ:APA , formerly known as Apache Oil.
-- The firm won a five-year $99.8 million award on Sept. 20 from the DEVCOM Army Research Laboratory to extend the company’s Maven Smart System to the U.S. military. Maven is part of the Pentagon’s National Geospatial-Intelligence infrastructure that supports AI battlespace awareness, global force integration and management, logistics, joint operations and targeting workflows.
On the other hand, Palantir co-founder and Chairman Peter Thiel sold more than $600 million worth of PLTR shares in late September and early October, bringing his total sales for the year to date to $1 billion+.
Still, those were all sales made on a previously announced schedule, and Thiel has reportedly not sold any of his voting shares. In fact, he and CEO Alex Karp and board member Stephen Cohen still firmly run the company as a triumvirate.
Palantir’s Technical Analysis
Here’s PLTR’s chart for roughly 2024 to date:
Readers will see that a cup-with-handle pattern formed in early August with a $30 pivot. That provided for some optimism at the time.
Now let’s look at a chart with what’s called “Andrews’ Pitchfork” model overlaid on top of Palantir’s breakout since roughly Aug. 9:
You can see that PLTR has repeatedly based over the past two months, almost consolidating its gains in a step-ladder-like way. The stock moved from the pitchfork’s lower chamber to its upper one and is now even testing the whole model’s upper trendline.
The chart above also shows that Palantir has held its 21-Day Exponential Moving Average (denoted with a green line) after an early September test. In fact, the stock has basically stayed above that line as its share price accelerated.
Similarly, PLTR hasn’t tested either its 50-Day Simple Moving Average (the blue line above) or 200-Day SMA (the red line) in some time.
True, Palantir’s Relative Strength Index (the gray line in the above chart) has moved above 70, which puts it slightly into technically overbought territory.
However, that doesn’t historically mean that a selloff is imminent, as stocks can stay overbought for some time. Instead, such a reading is typically more like a heads-up that shares could soon enter a basing period of consolidation.
In fact, Palantir’s Daily Moving Average Convergence Divergence -- the black and gold lines and blue bars at the bottom of the above chart -- looks bullishly postured.
The histogram of Palantir’s 9-Day Exponential Moving Average (the blue bars above) is in positive territory. Meanwhile, PLTR’s 12-Day EMA (the black line above) and 26-Day EMA (the gold line) are both well above zero, with the black line above the gold line. The combination of those three components in that way is historically considered bullish.
As for a pivot point for the stock, I don’t currently see an identifiable technical pattern in place, so I’m using the pitchfork’s upper trendline as a “moving pivot.”
That pivot was right around $41 at I wrote this -– close to the $41.45 that Palantir closed at on Friday. However, it appears likely to grow as time passes.
Still, a move by the stock to consolidate ahead of earnings would not be unhealthy in my opinion.
(Stephen “Sarge” Guilfoyle is Markets Commentator for Moomoo Technologies Inc.)
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