Trading Strategies for Palantir Stock Before And After Q4 Earnings

Palantir Technologies, Inc PLTR was trading about 2% higher on Monday as the company heads into its fourth-quarter earnings print after the close.

When Palantir printed mixed second-quarter earnings, the stock closed just 0.85% higher the following day, burning the premiums of any traders who had bought close-dated options on the stock.

For the third quarter, Palantir reported revenue of $477.88 million, beating estimates by about 7 million. The company reported earnings per share of 1 cent, which missed a consensus estimate of 2 cents.

For the fourth quarter, analysts, on average, estimate Palantir will report earnings per share of 3 cents on revenues of $502.25 million.

Ahead of the event, Citigroup analyst Tyler Radke on Feb. 3 reiterated a Sell rating on Palantir and maintained a $5 price target.

From a technical analysis perspective, Palantir’s stock looks neutral heading into the event, having settled into an uptrend pattern on the daily chart but losing support at the 200-day simple moving average (SMA). It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The Palantir Chart: Palantir has been trading in an uptrend since Dec. 28, with the most recent higher high formed on Feb. 2 at $9.21 and the most recent confirmed higher low printed at the $6.69 level on Jan. 25. If Palantir trades higher on Tuesday, Monday’s low-of-day will serve as the next higher low within the pattern.

• The stock is also trading in an inside bar pattern on Monday, with almost all of Palantir’s trading range taking place within Friday’s mother bar. The pattern leans neutral in this case because although Palantir is trading in an uptrend, the stock has fallen about 17% since Feb. 2.
• Traders and investors can watch for the stock to break up or down from Friday’s trading range on higher-than-average volume to gauge future direction. If the stock breaks up from the pattern, traders will want to see Palantir form a new high over the next few trading sessions.
• On Monday, the stock looked to be printing a doji candlestick on the daily chart. The candlestick leans bullish when found on a retracement to the downside.
• Bearish traders want to see Palantir suffer a bearish reaction to its earnings print, which could drop the stock down to near the 50-day SMA, where the stock may find at least temporary support.
• Palantir has resistance above at $8 and $8.92 and support below at $7.18 and $6.44.

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