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Back in January, I posted that my system was showing that the long-term bull cycle on Palantir was over and unfortunately, I was right. Since then, the stock has continued to sell off about 30% and has not made a high in the past 154 days. Now, in this video, I shared why that was happening and the sheer amount of hate that I got in the comments was absolutely crazy and I understand because there are a lot of people who are invested in this company.
There are a lot of people who want to see the company go up and the last thing that they want to hear is that the company could potentially be pulling back. Now, I don't have a 100% win rate, but what I'm going to share you in this video is essentially how to tell when the best environment to be invested in a stock currently is.
The best time to be in any name is during a bull cycle. I'm going to explain to you how to find these bull cycles on your own, how you can make sure that you're trading in the best environment possible and more importantly, we're going to talk about how low I think Palantir could actually get and more importantly, when the next bull cycle is going to happen.
Now, as we said before, in order for me to take a position in any stock, first and foremost, there needs to be a long-term bull cycle. What I want to do is trade in these massive uptrends and I want to sit out during these massive sell-off. Now, I have a full course that is completely free and both of the indicators that we'll be using today will be down in that course for free.
There's no credit card, there's no BS. That course will teach you in-depth how to tell if a stock is bullish or bearish, but very simply, the first thing that we need is the 33 fair value band or this band SMA that you see here to be green. If this is not green, then we do not trade. Very, very simple.
The second thing is that we need to see buying pressure on this monthly BX tender. At the very bottom of your screen when there's buying pressure on this indicator, it means that on the monthly time frame, the massive time frame that we have in the market, there's enough strength to where each and every single time that price pulls back, the chances of a bounce are pretty significant.
And if we throw up that 33 fair value band, you'll see that almost every single time that price pulls back into this level, it is a good buying opportunity until the cycles end. Now, in that video and you know, the post that I made back here in January, we talked about the cycle ending. Why? Well, because the monthly BX trend there, as you can see down here on your screen, closed dark red.
This here is an indication that normally that long-term cycle, that long-term breakout, is coming to an end. Now, I need you to understand that when this monthly BX trend there is red, it doesn't mean that the stock has to crater, right? But, if the stock is going to crater, it's going to happen during these red BX trend there's.
I mean, if we look at the S&P 500, you can see there's plenty of times that it's wrong. Like for instance, it messed this V-shape recovery up just last month pretty badly. However, during the 2022 bear market, would have saved us about 25% and 365 days. During the 2020 COVID crash, it would have saved us about a 30% downside.
And more importantly, during the 2008 financial crisis, while everybody was freaking out, it would have kept us out of the entire 50% drawdown over a 2-year period. So, just because the monthly BX is red does not mean that the stock has to crash, but it does mean that you are trading or investing in one of the least ideal situations to be invested in, which is why I ultimately do not trade it.
Now, if you look at Palantir, obviously back at the end of January, monthly BX closed red. So, that means we no longer touch it. You'll notice that since then, even though we've had a couple of these bounces here, price continues to make lower highs each and every single time. Now, this is why, if we go back and we take a look at my post, you guys can go and just search my name and then type in PLTR, you'll see that we were talking about a potential bull trap.
So, back here in March, we said that even though Palantir was bouncing, that this would be a potential trap. Now, the thing that you have to remember, and we really hammer this home in that bull cycle trading blueprint course, is that when we're trading above this 33 fair value band, we are going to be looking to buy all of the dips.
We're going to be expecting each of the dips to end up being a reason to buy. However, when we are in a bear cycle, each and every single push into this fair value band tends to be a potential rejection zone, of course, until the trend actually reverses. And so, that's why for each one of these pushes that we've seen up into this band, we've expected a potential rejection.
Now, the one thing that I'll say about Palantir right now is that we just broke a key key level. And I want to talk about the potential downside here. Now, as always, I don't have any short positions. I do not short the market. I don't bet against anything. Number one, because my system does the best in parabolic bull markets.
Number two, because I just think that shorting the juice is not worth the squeeze. I want you to notice something very important about Palantir right here. You're going to see that we had a huge support level at about $125. You're going to also see that there is a big volume block support right at about 135 to 130 dollars.
That's a three billion dollars support level block. You're going to see that we just broke that, right? And what I worry about here is that if we close this week like this, the chances of a continued sell-off really intensify, right? Not only would we just not be in a bear cycle, but price would probably at least continue to sell off to that 2 billion share block at about $100.
Worst case would be all the way down to $80, which means if this continues, I think at least another 15% to another 30 to 40% sell-off, as crazy as that sounds, is in the works. Now, as I said, I'm not shorting it. I'm not betting against the market. I'm not doing any of that. I'm not betting against Palantir.
However, this support level also lines up with our smart money zone or Fibonacci levels. If we take our Fibonacci retracement from that swing low at $66.32, and we pull it all the way up to this swing high right here, you're going to notice that right now we are pulling back into the institutional buy range.
Now, the institutional buy range is normally going to be for a lot of you guys who trade Fibonacci's, the golden zone. However, that level directly below it is called the smart money zone. The smart money zone is normally the absolute lowest that we see price pull back to. So, I'm not buying Palantir.
I need to wait until the actual bull cycle starts once again. But in my opinion, worst case scenario, I think there's another 20% to 25% move to the downside. And as always, I really hope I'm wrong, right? Because I am going to make no money with Palantir dropping. I'm just not touching this name. I haven't touched this name since the the beginning of this year.
Once price pushes over this 33 fair value band, and once this fair value band turns green, and once we see buying pressure hit the BX, then I will look to play the upside. I will not time the bottom. I will not hit it to absolute perfection, but once the trend actually reverses, we will enter most likely into another multi-year long bull cycle, and there'll be more than enough opportunity for me to take advantage of it.
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