Stock Of The Day: Where Will The Palantir Selloff End?

Palantir Technologies Inc. (NASDAQ:PLTR) is consolidating on Tuesday.  The shares declined by almost 2.5% on Monday after breaching a support level.

If the move lower continues, there is a good chance it pauses or even ends if it reaches the $175 level. This is why it is the Stock of the Day.

Support is a price or narrow price range where there is a large amount of demand. There are as many or maybe even more shares to be bought than there are for sale. This is why selloffs end or pause when they reach them.

Sometimes when a stock reaches support, new sellers enter the market, and they eventually overpower the buyers. This can result in a large drop. This is what happened to Palantir on Monday.

There can be support at prices that had previously been support.  This is a common occurrence in the markets.

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As you can see on the chart, this was the case with the $153 level. It was support in August and late November.

Support levels can stay intact because of sellers' remorse. Some of the people who sold shares around $153 in August came to regret doing so when the price moved higher afterward.

A number of these remorseful sellers decided to repurchase their shares if they could do so at the same price at which they were sold.

So when the price dropped back to $153 in November, they placed buy orders. The large concentration of these orders created support at the level once again.

You can also see on the chart that the $175 level was recently support. This means if the shares eventually reach this price, there is a good chance that there is support there again. This could be where the current downtrend ends.

Palantir may even reverse and rally.

Stocks can rally off support when impatient buyers start to outbid each other. This can force the shares into an uptrend, and it may happen here.

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