Traders got a stark reminder of how quickly fortunes can reverse for a stock as Palantir (PLTR) shares plunged -10% during the same day that they logged intraday all-time highs of 125.41. The slump came as markets weighed news of possible Defense Department budget cuts that could impact the data-analytics company’s business from government contracts, as well as the announcement of CEO Alex Karp’s plan that would allow him to sell up to 9.975 million shares (approx. $1.2b based on Wednesday’s close).

Shares made a big push of almost +24% to the upside after Feb. 3’s earnings beat expectations and have since been traveling within a shorter-term upward channel beginning with the post-gap up lows near 99. Price closed above this channel on Tuesday for an all-time high close of 125, but the breakout was not to be. Technically-minded traders may have noted bearish divergence on the Relative Strength Index (RSI). This means that price made new closing highs, but RSI at the same time made a lower close versus the previous peak – a sign that the stock’s momentum may be weakening, and that the pace of the gains could be slowing.

However, the previously mentioned 99 level that marked the low point after the gap could be supportive because it roughly lines up with the 21-day Exponential Moving Average and the upper boundary of another, older longer-term channel that began with the same type of post-earnings gap low on Nov. 5. Beyond that, price formed a double-top near 84 and the Volume Profile study shows heavy trading near the 75 price level, so these could be further downside areas to watch. To the upside, the yearly +2 Standard Deviation Channel sits just beyond the all-time highs at about 128.

Tune in live from 8 a.m. to 5 p.m. ET, or anytime, anywhere, on‑demand.

Or stream it via thinkorswim® and thinkorswim Mobile, available through our broker-dealer affiliate, Charles Schwab & Co., Inc

Please do not reply to this email. Replies are not delivered to Schwab Network. For inquiries or comments, please email [email protected].

See how your information is protected with our privacy statement. 

Charles Schwab and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions. Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a wholly owned subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, or futures commission merchant.