Stock Of The Day: Is Palantir Finally Reversing?

Shares of Palantir Technologies Inc. (NASDAQ:PLTR) are climbing Wednesday. As you can see, they staged a reversal after reaching the $130 level.

This is why Palantir is our Stock of the Day. There is a good chance there is more upside to this rally.

The chart of Palantir illustrates two important market dynamics that successful traders understand.

The first is that in the market, a price level that had been support in the past can become support again. This is what happened with the $130 level for Palantir.

A lot of the people who sold their shares while they were at support in July regretted doing so after the price rallied. They experienced seller's remorse.

A number of them made the decision that if they could ever do so, they would buy their shares back at the same price they were sold for. So, when the price dropped back to $130, they placed buy orders and this formed support.

Another important market dynamic may soon come into play.

Price levels that had been support can also convert into resistance. This could happen with the $150 level for Palantir.

Many of the investors and traders who bought shares while they were at this support came to regret doing so when the support broke and the price dropped. Some decided to sell if they could ever do so at breakeven.

This means that if Palantir rallies back to this price, these remorseful buyers will place sell orders. If there is a large enough quantity of these orders, it will create resistance at the price that had been support.'

This resistance could put a ceiling over the price of the stock.

Successful traders know that remorse and regret are very real and important things in the market. Remorseful sellers can create support at former support levels. Remorse buyers can create resistance at former support levels.

Understand these dynamics can help traders decide when to exit or enter positions.

Image: Shutterstock