Palantir Is Ready To Reawaken After Slumbering Long Enough

Palantir Technology (NYSE:PLTR) stock dropped sharply following disappointing earnings on Nov. 9 and got stuck in a sideways consolidation pattern.

A close-up shot of a hand on a screen with the Palantir (PLTR) logo.

The old trading adage “never sell a dull market” more than applies to Palantir. Time to take a guardedly bullish stance as 2022 begins.

Certainly the analysts are still somewhat bullish on PLTR stock. The eight analysts who provided stock ratings on Tipranks have a $23.14 price target. This equates to about 25% upside. The lowest target is $18 with the highest being $31.

Technical Take

The technical picture is improving slowly but surely for PLTR stock. The nine-day relative strength index has turned higher after reaching deeply oversold readings. Moving average convergence divergence (MACD) recently generated a fresh new buy signal as it got back into positive territory.

Momentum is improving as well. Bollinger Percent B has also climbed higher after printing negative.

Daily chart, RSI, MACD, momentum, and Bollinger Percent B of Palantir Technologies, Inc. (PLTR)
Source: Source: The thinkorswim platform from TD Ameritrade

More importantly, shares held the major support area at $17.50 and are now look poised to break back above the 20-day moving average at $18.77.

I didn’t always have a near-term bullish outlook for Palantir. My previous analysis on PLTR stock from Nov. 12 had a decidedly more bearish tone. I recommended selling an out-of-the-money December call $27/$29 spread with the stock trading around the $23 area. Implied volatility was also much higher at the time near the 50th percentile.

Now that PLTR stock has dropped over 15% and implied volatility has fallen sharply, my opinion has changed. Price does matter.

Implied volatility  is currently at only the 10th percentile, so option prices have become comparatively much cheaper. This favors option buying strategies when constructing trades. So, to position for an eventual pop in PLTR stock a defined risk call calendar spread makes probabilistic sense.

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