It’s far from the perfect investment and it has kept many investors on the sidelines. But following a recent winning streak, could Palantir Technologies (NYSE:PLTR) be set to deliver an even larger jackpot? Let’s look at what’s happening off and on the price chart of Palantir stock, then offer a risk-adjusted determination aligned with those findings.
To be rationale and more prudent than your fellow investor is no guarantee of above-average, dazzling success on Wall Street. In today’s market sometimes questioned bullish trends in motion can stay in motion for much longer than we often give them credit for. EV stocks Tesla (NASDAQ:TSLA), Quantumscape (NYSE:QS), Blink Charging (NASDAQ:BLNK) or Nio (NYSE:NIO) might come to mind.
But a casino? Well, if it’s PLTR that’s what some are saying.
Recent direct listing and clandestine big data operative Palantir Technologies had some terrific news earlier this week. The company announced a three-year deal with the U.S. Food and Drug Administration to analyze and integrate its data. That includes improving the go-ahead for drugs and product safety, which in today’s novel-coronavirus-handcuffed world, sounds like a reason to cheer, right?
News of its estimated $44.4 million FDA contract catapulted Palantir stock more than 21%. It was an additional positive layer for the company’s long-term case alongside its involvement with Operation Warp Speed. But not everyone has been impressed with Palantir.
The tech outfit has quickly become a battleground or at least, a very strongly criticized stock in its brief time in the public market. Long-time backer billionaire George Soros has publicly slammed Palantir’s business practices. InvestorPlace’s Mark Hake — a guy who knows his way around an income statement — cautioned investors regarding PLTR’s negative free cash flow. And they’re not alone.
Curiously, there has been well-publicized, aggressive insider selling at the highest levels of Palantir and at much lower market prices, which has also gone way beyond funding college tuition for the twins. And one of Wall Street’s most notorious short-sellers, Citron Research, dubbed PLTR a casino on Nov. 27. Front man Andrew Left set a price target of $20 by years end.
There’s not much love for it today. But in a market that continues to flex its muscle and where trends continue to be the allies of investors, Palantir stock is shaping up for more to come on its daily price chart.
Palantir Stock Daily Price Chart
Source: Charts by TradingView
To be certain, bad things can happen to investors that overstay their welcome. EV stocks Nikola (NASDAQ:NKLA), Kandi Technologies (NASDAQ:KNDI) or Workhorse Group (NASDAQ:WKHS) are testaments to that. And while it’s easy to point at overbought hype surrounding those names or company-specific reasons behind the implosions, stocks are always prone to corrections.
Importantly, trend persistence shouldn’t be readily dismissed. And right now, PLTR is setting up as a stock that remains in position to prove more dismissive investors wrong.
Technically, shares of Palantir are putting together a symmetrical triangle pattern. Odds favor a continuation of the existing trend out of this type of formation. And as PLTR has gained roughly 200% from its October debut lows, the implications are for an upside breakout to new all-time-highs.
Ultimately, as illustrated on the provided daily chart, getting past resistance from around $29 – $31 looks key to a successful rally. I’d also caution today’s misaligned stochastics needs to bullishly flip prior or during any future price challenges in shares.
If those stock pricing transactions do occur, and preferably on the down-low and should investors accept this mission of buying into PLTR, deploying a March $30/$40 bull call spread looks like a cunning way to play the game.
On the date of publication, Chris Tyler holds, directly or indirectly, positions in Nio (NIO) stock and its derivatives, but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.