Aniket PujariJust before I left for vacation, I wrote about a possible hedge strategy in the S & P 500 against resistance levels. Since then , the S & P 500 is about 8% lower and we are carrying the hedge. From a technical point of view, I’m watching a possible support zone in the S & P 500 ranging from 5,675-5,400 as we trade right in the middle of that zone — around 5,540. So, we’re possibly in the support zone confirmed by diverging market internals that suggests we’ve reached oversold status. That’s despite the severity and pace of the headlines coming from Washington. Based on this analysis, we need to have ready our shopping list of stocks we would like to accumulate should this support zone hold. I ran a scan this morning I call “20-for-2”. We’re looking for at least 20% growth in all of the following: Average EPS and sales growth over the last two quarters Average EPS and sales growth over the last two years Average EPS and sales growth expected over the coming two quarters Market cap greater than $1 billion 50-day moving average above the 200-day moving average Based on this scan some familiar names to this column appeared: Duolingo , DoorDash , Hims & Hers Health , Innodata , Nvidia , On Holding , Shopify and Palantir . Palantir is that one that’s been playing hard to get in our holdings at Inside Edge Capital. Palantir is demonstrating leadership in the artificial intelligence software platform space and has the top- and bottom-line growth track record to prove it. Palantir is well positioned in the current administration’s government efficiency mandate. The weekly chart shows the stock has pulled back more than 30% from the all-time high, which would on the surface be considered a bear market. But context is key, as the stock is up more than 200% in the last 12 months. The 20-week moving average in orange is holding support and looking at the annual and quarterly sale and earnings growth you see a stellar example of 30% growth across all time frames. In 2024, EPS increased 64% from 25 cents in 2023 to 41 cents in 2024. Moving to the daily chart, we see the depth of the pullback relative to the Jan. 13 low. Using Fibonacci restracements, we see the 61.8% retracement attempted to hold as support, but multiple efforts to run stops through this highly visible retracement level resulted in a push down to the 78.6% retracement level. This is what I refer to as the “retracement of last resort.” If you don’t hold this level ($73.34), you’re probably heading down to a full 100% retracement, which is a full round trip back to the Jan 13 low. Bottom line, we see this zone in the S & P 500 as an opportunity to take off our short hedges and also deploy cash into strong names like PLTR. The accumulation zone is $82.23-$63.39. The risk on this trade can unfortunately only be determined by you and your financial advisor. How does PLTR fit into your investment horizon, risk tolerance, and financial plan? If it’s a short-term trade, I would not want to see the stock below $63. If it’s a long-term investment and you’re ok buying an AI leader at 35%+ discount and letting it drop a bit lower, position size appropriately such that additional selling would not disproportionately impact your overall portfolio. Personally, and for investors at Inside Edge Capital, we’ll be approaching it with the latter approach. -Todd Gordon, founder of Inside Edge Capital, LLC DISCLOSURES: Gordon does not own PLTR yet, but intends to add to holdings in the near future and also reserves the right to take no action based on a deterioration of future market conditions. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
