Palantir's 2.6% Plunge: A Six-Day Sell-Off Unravels as AI Rotation Intensifies

Summary
• Palantir (PLTR) tumbles 2.64% to $153.58, marking its sixth consecutive session of losses
• Intraday range widens to $142.34–$155.23 amid heightened volatility
• Short seller Citron Research and broader AI sector weakness fuel selloff
• Microsoft (MSFT), sector leader, declines 0.74% as tech rotation accelerates

Palantir’s relentless sell-off has ignited a firestorm in the AI sector, with shares now down 22% from their 52-week high of $190. The stock’s collapse aligns with a broader rotation out of speculative AI plays, as short sellers and profit-takers capitalize on waning momentum. With the 50-day moving average ($162.17) in sight, traders are bracing for a potential breakdown into critical support levels.

Short Seller Skepticism and AI Rotation Fuel PLTR's Decline
Palantir’s six-day losing streak is driven by a confluence of bearish catalysts. Citron Research’s Andrew Left has intensified pressure with a scathing report labeling PLTR 'detached from fundamentals,' arguing its valuation should be slashed to $40 if benchmarked against OpenAI’s $500B valuation. Simultaneously, the broader AI sector is correcting after months of euphoria, with megacap peers like NVIDIA (NVDA) and C3.ai (C3) also retreating. Technically, PLTR’s failure to hold above its 50-day moving average ($162.17) has triggered algorithmic selling, while the Relative Strength Index (RSI: 49.4) suggests oversold conditions may not yet justify a reversal.

Bearish Options Playbook: Leveraged Puts and ETF Positioning
• 200-day average: $130.73 (far below current price)
• RSI: 49.4 (neutral, but trending downward)
• MACD: 7.14 (bullish) vs. signal line 9.04 (bearish divergence)
• Bollinger Bands: Lower band at $143.71 (critical support)

PLTR’s technicals paint a mixed picture: while the MACD remains positive, the RSI and price action suggest exhaustion. For traders, the Direxion Daily PLTR Bull 2X Shares (PLTU) offers 2x leverage but has already fallen 5.43%, reflecting the stock’s weakness. Short-term bearish positioning should focus on put options with high leverage and liquidity. Two top picks from the options chain are:

• PLTR20250829P145 (Put, $145 strike, 2025-08-29):
- IV: 66.96% (high volatility)
- Leverage ratio: 54.65% (strong)
- Delta: -0.2585 (moderate sensitivity)
- Theta: -0.0931 (moderate time decay)
- Gamma: 0.0189 (responsive to price swings)
- Turnover: $6.0M (liquid)
- Payoff at 5% downside: $10.58 (max profit if PLTR drops to $145.89)
This put offers asymmetric upside in a bearish scenario, with high leverage amplifying gains if PLTR breaks below $145.

• PLTR20250829P143 (Put, $143 strike, 2025-08-29):
- IV: 67.21% (high)
- Leverage ratio: 67.24% (exceptional)
- Delta: -0.2204 (moderate)
- Theta: -0.0985 (moderate decay)
- Gamma: 0.0172 (responsive)
- Turnover: $1.3M (liquid)
- Payoff at 5% downside: $12.58 (max profit if PLTR drops to $145.89)
This contract’s high leverage and moderate delta make it ideal for a controlled downside bet, with a 5% move yielding ~85% returns.

Hook: Aggressive bears should target PLTR20250829P145 if the stock closes below $145, while PLTR20250829P143 offers a safer entry for a 5% pullback.

Backtest Palantir Stock Performance
The backtest of Palantir (PLTR) after an intraday plunge of at least -3% shows favorable performance, with win rates and returns indicating positive short-to-medium-term gains. Here's a detailed analysis:1. Frequency and Win Rates: The event occurred 66 times over the backtested period. The 3-day win rate was 68.18%, the 10-day win rate was 71.21%, and the 30-day win rate was 89.39%. This suggests that following an intraday plunge, the stock tends to recover or even exceed its previous price levels within a short to medium term.2. Returns: The average 3-day return was 3.14%, the 10-day return was 7.40%, and the 30-day return was 24.69%. Additionally, the maximum return during the backtest was 37.34%, which occurred on day 59 after the plunge. This indicates that while there's some volatility, PLTR often rebounds strongly from such events.In conclusion, if you're considering a strategy that involves buying Palantir after a significant intraday plunge, the historical data suggests a higher probability of a positive return, especially if you hold your position for 3 to 30 days. However, it's important to note that past performance is not always indicative of future results, and investing always carries risks.

Bullish Breakout or Bearish Breakdown? PLTR Traders Must Watch These Levels
Palantir’s six-day sell-off has created a critical inflection point. While the stock’s 52-week high of $190 remains a distant memory, the 50-day moving average ($162.17) and Bollinger Bands lower bound ($143.71) will dictate near-term direction. A close below $143.71 would confirm a bearish trend, validating Citron’s thesis and accelerating the rotation out of AI. Conversely, a rebound above $155.23 (intraday high) could reignite speculative buying. Sector leader Microsoft (MSFT) falling 0.74% underscores the broader tech malaise. Action: Monitor the $145–$143.71 range for a decisive breakdown or a short-covering rally.