To The Moon

With U.S tax season approaching, retail investors might need to cash out some of their holdings to cover last year’s capital gains taxes. But honestly, the exact reason behind the stock’s movements might not matter all that much. For these overhyped stocks, the only thing driving them up is constant inflows of cash, and the only thing pulling them down is money flowing out. At its core, it’s just a matter of supply and demand.

The investors who chased these stocks a couple of weeks ago probably weren’t doing it because of strong fundamentals. When a stock’s valuation hits 100x or even hundreds of times its earnings, talking about fundamental analysis starts to lose meaning. It’s turned into a game of hot potato. At this point, the best we can do is lean on technical analysis to spot key levels and signals.

This brings us to the big question: 

Is this pullback in Palantir $Palantir Technologies Inc.(PLTR)$  just a blip, or is it heading for a bigger drop? Like we’ve said, fundamentals don’t carry much weight here. Investors have been optimistic about Palantir’s long-term growth potential before, but even the brightest prospects can’t sustainably prop up a 500x valuation. Trying to analyze it through traditional metrics like revenue or profit growth won’t give you solid answers either. For momentum stocks like this, technicals are what matter most.

As long as no major black swan event crashes the party, this bubble could keep inflating for a while longer. That said, we’re bound to see small pops along the way—like what’s happening now. Palantir’s chart is almost a textbook case. Its RSI shot past 80 to 90, hitting severely overbought territory, and after lingering there for about two weeks, it couldn’t escape the inevitable. Prolonged overbuying triggered this correction.

The good news? After two days of declines, the RSI has dropped back to around 50—a more neutral zone that could set the stage for a bounce. Plus, today it fell to around $100, a critical technical level. 

On last Thursday’s intraday trading, it briefly touched this point before rebounding. Now it’s back there again, and so far, it’s holding with decent volume. 

This week’s trading will be make-or-break. If it stays above this level for two or three days, this dip might just be a cooldown—a small bubble bursting with room to reflate and push toward that $125 high again. 

But if it breaks below $100 , next support level is $84.83, the outlook darkens. The bubble could fully pop, and the next support might not show up until $68.50, which is another 20–30% drop. That’d be a near-50% plunge from its peak. While that’s a low-probability scenario right now, it’s not off the table.

So whether you’re looking to sell or buy, the first few days of this week are critical. Don’t try to outsmart the market or guess if it’ll rise or fall tomorrow. Just watch the price action, follow the technical signals, and trade accordingly. The worst thing you could do right now is try to catch the absolute bottom before a rebound. Emotions are running high, and if it dips again the next day, it’s tough to stay rational. Avoid putting yourself in that difficult spot.

To make things trickier, this week brings broader market risks. Big-picture factors could sway individual stocks like Palantir. Trump’s policy updates keep trickling out, and on Friday, we’ll get the Fed’s preferred inflation gauge, the PCE. Lately, investors have been jittery about inflation picking up, which could force the Fed to rethink rate cuts. If the PCE data comes in hotter than expected, it could spark a market-wide pullback. When the market’s this overheated, institutions looking to lock in profits just need an excuse—and inflation news could be the scapegoat. If that happens, all the technical levels and support zones we’re watching for individual stocks might not mean much anymore.

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