Alert Palantir PLTR stock indicates signs of fatigue
Despite recent gains in the stock price of Palantir (NYSE: PLTR), concerns persist about whether the current valuation accurately reflects the company’s worth. Technical indicators are also suggesting potential uncertainty. Currently, Palantir is showing signs of consolidation, trading at $42.97 and experiencing a 2% increase for the day.
An analysis of PLTR’s weekly chart indicates possible exhaustion, indicating a potential pullback. This analysis was shared by a market analyst using the pseudonym SmartReversals in an X post on October 20. One key indicator is the formation of a hanging man candle near the upper Bollinger Band, which often signals a reversal. The overbought stock is further supported by the relative strength index (RSI) reaching 77.24, well above the critical 70 threshold. Historically, when stocks approach this level, it suggests weakening bullish momentum and the possibility of sellers entering the market. Previous instances of reversal candles near the upper band have resulted in corrective moves, with support typically found at the 20-week moving average (20MA), currently at $31.18. The stock has also found temporary support at the 10-week moving average.
Analyst Peter DiCarlo also expressed concern about the technical setup of PLTR, suggesting a potential 10% pullback. DiCarlo noted that the software giant is likely to enter a compression zone, potentially testing lower support zones.
Another analysis by Afortune Trading supported the cautious outlook for the PLTR share price. According to their analysis shared on October 18, after reaching a recent high of $45, the stock has formed a descending triangle pattern, indicating a potential pause or pullback in its upward momentum. Key support levels are at $40.94 and $38.05, with further support at $35.07 and $31.10. The RSI also suggests an overbought condition, indicating a correction may be on the horizon.
Analysts have a mixed outlook on the PLTR share price. Some, like Jake Ruth, believe that at over $40, Palantir’s stock is overpriced and does not accurately reflect its value. Others, such as Greg Moskowitz from Mizuho, maintain a “sell” rating but have raised their valuation from $24 to $30, expecting strong earnings. However, there are still optimists who highlight Palantir’s role in artificial intelligence (AI). Wedbush’s Daniel Ives increased his target to $45 with an “Outperform” rating, while Mariana Perez of Bank of America set a target of $50 with a “Buy” recommendation.
Despite the mixed outlook, Palantir has had a successful year, benefiting from optimism surrounding its role in the AI space. Additionally, the company has growth potential due to its potential involvement in military and intelligence-focused data analytics software amid rising geopolitical tensions. Palantir has secured lucrative deals with select government agencies, further contributing to its positive prospects.
