Momentum resets are scary events. They can trigger all kinds of unhealthy trading emotions, especially regret.

Put yourself in the shoes of someone forced to watch from the sidelines as Palantir Technologies Inc. (PLTR) posted a massive 25% earnings rally last month.

Now imagine taking profits before the stock gapped higher and continued to run into February.

Even worse, imagine chasing that earnings gap in hopes of netting life-changing profits as the stock becomes increasingly overbought.

Remember, FOMO trades are lethal. You can’t possibly buy every strong stock during a rip-roaring bull run.

Plenty of trades will slip through the cracks. Sometimes, these trades are the biggest winners on the market.

To be fair, I’m sure you weren’t blindly tossing money at PLTR (or any of the other red-hot momentum names) as the speculative growth trade shot into the stratosphere a few weeks ago.

But I’m dead certain many other traders weren’t as careful.

In fact, I’d bet more than a few greedy speculators lost their shirts – and their brokerage accounts – when these same stocks abruptly started to fall apart.

You might think the ride is over now that PLTR and the like are well off their highs.

Not so fast!

Here's the thing about markets: There’s always a fresh opportunity up ahead.

While everyone else is licking their wounds, you have the chance to plan your next big buy.

Even when trading conditions seem to be deteriorating, a second chance at a winning trade is right around the corner – even in a stock like PLTR.

From “Missing Out” to Cashing In

Don't waste your precious time complaining about the momentum reset. Instead, let’s bust out our charts and get to work!

Here’s where PLTR stands as of yesterday’s close:

PLTR had marched higher for the better part of the past 12 months. It finished 2024 with a gain of nearly 350%, thanks mainly to a fourth-quarter surge that has carried over to the new calendar year.

Investors were then treated to an incredible 25% earnings gap at the very beginning of the month as the company dropped impressive numbers and guidance.

But it wasn’t done yet. Instead of attempting to fill its earnings gap, PLTR continued its parabolic move, topping at a year-to-date gain of more than 60%.

That’s where the trouble started…

Market conditions quickly changed last week as some of the highest-flying stocks began to run out of steam. And as more nervous bulls hit the sell button, PLTR and the other momentum darlings hit the wall, unleashing a cascade of selling.

The stock lost 30% of its value in just five trading days. Quite the haircut! Yet the “disastrous” one-week drop still hasn’t closed that pesky earnings gap from just a few weeks ago. So unless we’re staring at a major market top in the making, I don’t think this is the end of the PLTR story…

In fact, I can see PLTR stampeding toward $200 once the bull market finds its legs. And despite less than ideal conditions heading into March, you can prepare to strategically buy PLTR if and when the stock sets up for another run.

Here are my two preferred buy points:

1. Aggressive buy point: Set up a buy order to purchase shares between $77-$83.

If PLTR fills its earnings gap, I would expect it to catch somewhere in its December-January consolidation zone. Look to pick up shares in this area near $80 on a positive day, and set a reasonable stop-loss level.

This is an aggressive buy zone that would work if we see the market stage a strong recovery at some point over the next two to three weeks.

2. Conservative buy point: Buy the bottom of the range near $64.

If market conditions remain challenging, we could continue to see a deeper correction in PLTR that takes it to (or below) its January lows.

In this scenario, I would expect a relief rally to fail well before PLTR approaches its former highs, and the next leg of its drawdown to play out over the next several weeks to months. This would allow its longer-term moving averages to catch up and momentum to completely reset.

Watch for the price to approach or undercut its 200-day moving average (upward-sloping blue line in the chart above) somewhere between the high $50s and $64.

You’ll also want to wait for confirmation of a sustainable bounce (perhaps a couple of days of positive action) before initiating a new position.

Evolve and Adjust!

Remember, there’s no free lunch on Wall Street. The market will reward blind speculation from time to time. But those conditions where you can chase any crazy stock higher and still book gains always come to a close. 

Is this the end of the world? Of course not! The market is just evolving and adjusting, as it always does.

It’s up to you to adjust and plan your next trade. That way, you’ll be ready to take advantage of the next big rally.