Stock Of The Day: Is The Palantir Breakout Finally Here?

Shares of Palantir Technologies Inc. PLTR are moving higher Thursday. They may have just broken out. This could be a bullish dynamic that suggests a new uptrend is forming.

This is why Benzinga’s team of technical analysts and traders has made it our Stock of the Day.

As you can see on the chart, in late March Palantir ran into resistance around the $97.75 level. After this happened, it sold off and headed lower.

Some of the people who created the resistance with their sell orders became concerned that others would be willing to sell their shares at a lower price than they were. So, these concerned sellers reduced their offering prices.

This trading action resulted in a snowball effect that caused a new downtrend to form as these concerned sellers undercut each other.

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Last week, the stock returned to this level and encountered resistance again. This wasn't a surprise. There can be resistance at price levels that were previously resistance due to buyer remorse.

Some of the people who bought shares at around $97.75 in March regretted doing so when the price dropped. Many decided to sell their shares if the stock ever returned to their buy prices so they could get out at breakeven.

As a result, when the stock returned to the level, they placed sell orders. This large group of sell orders formed resistance at the level again.

But now, this resistance appears to have been broken. The stock is trading above it. This could mean that the traders and investors who created the resistance with their sell orders have either finished or canceled their orders.

With this large amount of supply or shares for sale taken out of the market, buyers may be forced to outbid each other and pay higher prices to bring sellers back in.

This could result in a new uptrend forming, and it may be happening with Palantir.

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