Palantir’s RSI nears ‘historically high levels’; Here’s what you need to know

Although the price of Palantir Technologies (NYSE: PLTR) shares has been rapidly growing since the stock’s inclusion in the exclusive society of the S&P 500 index, certain indicators suggest that its rally might be nearing its conclusion, and consolidation might be in order.

As it happens, Palantir stock’s daily relative strength index (RSI) is “pulling into historically high levels” and might indicate the “curse of S&P inclusion,” according to the observations shared by market analytics and trading platform TrendSpider in an X post on September 24.

What this means for PLTR stock

Indeed, Palantir stock’s current RSI value stands at 67. This means PLTR shares are nearing the overbought zone (above 70), at which point they would enter the trading territory at a level above their intrinsic or fair value and could expect consolidation or even correction.

As for the “curse of S&P 500 inclusion” the platform’s team mentioned, it seems to refer to stocks enjoying a short-term boost and then underperforming after joining the prestigious asset group, something that has happened to Tesla (NASDAQ: TSLA) in 2020 and Moderna (NASDAQ: MRNA) in 2021.

Specifically, the companies often enter the index at the peak of their growth cycle. By this time, the price of their stocks may have already factored in the larger part of their growth potential, leaving limited room for additional advances, which might be happening in Palantir’s case, too.

On the other hand, PLTR stock consistently staying above the 200-day simple moving average (SMA) is a strong bullish signal, demonstrating that it has been trending upward for a long period of time, specifically since mid-2023, and the RSI momentum is strong, albeit approaching the overbought range.

Palantir stock price analysis

At press time, the price of PLTR stock amounts to $37.87, which represents a 0.079% gain in after-hours, a 3.73% increase across the week, adding up to the accumulated gain of 23.10% over the past month and advancing 129.04% since the year’s turn, according to the data on September 24.

As a reminder, PLTR stock has experienced a positive trigger with its introduction to the S&P 500, with its longer-term growth supported by the company’s advancements in artificial intelligence (AI), the most recent of which includes a $100 million contract with the United States military.

All things considered, Palantir’s RSI nearing the overbought zone indicates a chance of a short-term pullback, which might precede a further upward move. That said, trends in the stock market can change, so doing one’s own research and following any news, e.g. when is Palantir earnings report coming out, is critical.