The “easy money” in momentum stocks just evaporated. Palantir, AppLovin, Meta — these former high-flyers are plummeting, and countless traders are watching their profits disappear.

Was this unpredictable chaos? Absolutely not. The charts were screaming warnings. The problem? Most traders weren’t listening to the right signals.

I’m about to show you exactly what those signals were. If you’re tired of being surprised by market crashes, this is the analysis you need to read right now.

Let’s dive into what’s happening, and analyze the technical charts. And stick around, because I’ll show you how my proprietary indicators can help you spot these major shifts before they wipe out your gains!

The Momentum Stock Rollercoaster: From Peak Excitement to Sudden Plunge 📉

Momentum stocks, by definition, are the market’s darlings — stocks that have shown strong upward price trends, outperforming the average. Investors jump in, hoping to ride the wave, buying high and aiming to sell even higher.

The iShares MSCI USA Momentum Factor ETF ($MTUM), a key benchmark for this sector, tells the story. It’s seen almost half of its year-to-date gains vanish in just a week!

And it’s not just the ETF. Big names like Palantir (PLTR), AppLovin (APP), and Hims & Hers Health (HIMS), once market favorites, have been hammered. Analysts like Farzin Azarm from Mizuho Securities are warning investors not to expect a quick rebound to recent highs. He even suggests we might be seeing a broader “selloff” due to retail traders using margin and leverage — amplifying both gains and losses.

While some, like Fundstrat’s Tom Lee, see this as a “minor setback,” the charts and the underlying reasons paint a more complex picture.

Decoding the Downturn: Why Are Momentum Stocks Crashing? 🤔

According to Piper Sandler’s Danny Kirsch, each stock seems to have its own catalyst for the selloff. Let’s break it down:

• Palantir (PLTR): Rumors of potential Pentagon budget cuts under the Trump administration spooked investors. Less government spending could mean less business for Palantir, a company heavily reliant on government contracts.
• AppLovin (APP): A negative report from Bear Cave triggered a sharp decline. These kinds of reports can sow doubt and fear, especially in high-momentum stocks where sentiment plays a huge role.
• Hims & Hers Health (HIMS): The company announced it would stop selling popular GLP-1 drugs due to the FDA removing semaglutide from the shortage list. This directly impacts their revenue stream, leading to investor concern.
• MicroStrategy (MSTR): Falling over 11% and down over 50% from the top since late last year, MicroStrategy’s woes mirror the Bitcoin crash. It’s become a proxy for Bitcoin trading, amplifying crypto market volatility.
• Meta Platforms (META): Even the mighty Meta, a momentum stalwart, has given back almost half of its recent record-breaking 20-day winning streak.

It seems like a perfect storm of negative news hitting these darlings of the market all at once. But is there more to it than just news headlines? Let’s turn to the charts and my proprietary technical analysis.

Technical Analysis: Spotting the Red Flags with TradeDots Exclusive Indicators 🚦

Let’s get technical! I’ve analyzed the charts of AppLovin, Palantir, Hims & Hers Health, MicroStrategy, and Meta Platforms using my suite of proprietary indicators designed to identify momentum shifts and potential crashes before they happen.

AppLovin (APP) — Chart Analysis 📊

Looking at the AppLovin chart, we can see some clear warning signs that my indicators picked up:

• High Reversal Probability: My proprietary Reversal Probability Indicator, visible on the chart, was flashing a staggering 86.84% probability of a price reversal at the peak. This extremely high probability alone should have put traders on high alert.
• Momentum Crash Detector & Demand Decline: The sharp vertical blue bars fired, signaling a sudden and significant decline in demand. This wasn’t just a minor dip; it was a clear break in the strong buying pressure that had propelled APP higher. The Momentum Crash Detector accurately pinpointed the shift in momentum.
• Trend Reversal Confirmation & Arrow Signal: The price broke decisively below the support resistance. Furthermore, the indicator generated a clear arrow “Reversal” signal after the bar close where it detected a sign in price decline.
• OBOS Index (Overbought/Oversold Index): While not explicitly shown as a signal here, note the “OBOS Index” on the chart. The indicator factors in volume and price acceleration, was likely showing overbought conditions leading up to the crash, suggesting a pullback was probable.

Key Takeaway for AppLovin: The chart, combined with TradeDots indicators, clearly signaled a potential reversal before the major downturn.

Palantir (PLTR) — Chart Analysis 📊

Now, let’s examine Palantir:

• High Reversal Probability: Just like AppLovin, Palantir exhibited a very high Reversal Probability, registering at nearly 80% at its peak. This strong statistical warning suggested a significant likelihood of a trend change.
• Extremely High OBOS Index (Overbought/Oversold Index): The OBOS Index for Palantir reached an extremely elevated level of 70. To put this in context, the normal OBOS range is typically between +40 and -40. A reading of 70 is a screaming overbought signal, indicating that Palantir was severely stretched and due for a correction.
• Minimal Chance of Further Rise: Adding to the bearish confluence, my indicators calculated only a 4% probability of further upward movement. This minuscule probability, combined with the high reversal probability and extreme OBOS, painted a clear picture of exhaustion in Palantir’s upward momentum.

Key Takeaway for Palantir: Again, my indicators provided multiple early warnings of a potential downturn, highlighting the failed breakout and weakening support levels.

Hims & Hers Health (HIMS) — Chart Analysis 📊

Let’s analyze Hims & Hers Health:

• Extremely High Reversal Probability: HIMS exhibited an exceptionally high Reversal Probability, exceeding 95%. This near-certainty of a reversal was a massive red flag, indicating an unsustainable price ascent.
• Momentum Crash Detector & Trend Channel Breakdown: The Momentum Crash Detector (blue vertical bar) accurately pinpointed the moment of peak momentum and subsequent sharp decline.
• Extreme OBOS Index (Overbought/Oversold Index): The OBOS Index for HIMS reached a highly overbought reading of 81. Surpassing the already extreme reading of Palantir, this level signaled an even more overheated condition, with buyers completely exhausted and a sharp correction highly probable.

Key Takeaway for HIMS: The combination of the Momentum Crash Detector and Trend Reversal Confirmation within a defined channel provided strong signals of an impending downturn in HIMS.

MicroStrategy (MSTR) — Chart Analysis 📊

Now, let’s look at MicroStrategy:

• 1% Probability Price Target Hit: TradeDots indicators calculated a price target with only a 1% probability of being reached, which was precisely hit at the peak. This extremely low probability target being met signaled a likely exhaustion of the upward move and a high risk of reversal.
• Reversal Probability Over 60%: MSTR displayed a Reversal Probability exceeding 60% at its peak. While not as extreme as HIMS or APP, this still indicated a significant statistical leaning towards a trend change.
• Overbought OBOS Index (Overbought/Oversold Index): The OBOS Index for MSTR reached an overbought level, signaling that buying momentum was waning and the stock was becoming vulnerable to a pullback.
• Bearish Engulfing Candle Confirmation: A massive bearish engulfing candle formed right at the peak. This powerful candlestick pattern is a strong visual confirmation of overwhelming supply entering the market at the high price levels, further reinforcing the bearish reversal scenario.

Key Takeaway for MSTR: The descending channel breakdown, combined with the Reversal Sell Signal and Support Level Breakdown, provided multiple confirmations of the bearish momentum taking hold in MicroStrategy.

Meta Platforms (META) — Chart Analysis 📊

Finally, let’s examine Meta Platforms:

• Extreme OBOS Index Reaching 97: On the very last day of Meta’s 20-day winning streak, the OBOS Index skyrocketed to an astonishing 97. This reading is off the charts, signifying an extremely overbought condition and an unsustainable level of bullishness. Such an elevated OBOS reading is a rare and powerful signal of imminent reversal.
• Decreasing Momentum During Streak: Crucially, while Meta’s price continued to climb during its 20-day streak, my momentum indicators were showing decreasing momentum on most days. This divergence between price and momentum is a classic red flag, indicating weakening underlying strength and a likely trend reversal, even as the price makes new highs.
• High Reversal Probability Over 75%: At the peak of the 20-day streak, my indicators calculated a Reversal Probability exceeding 75%. This high probability further reinforced the warning signs of an overextended and vulnerable stock.
• Reversal Sell Signal Confirmation: My system generated a clear Reversal Sell Signal precisely as Meta reached its peak. This signal, combined with the extreme OBOS and decreasing momentum, provided a strong and actionable indication to exit long positions or even consider shorting META.

Key Takeaway for META: The failed channel breakout, coupled with Reversal Sell Signals and overbought conditions indicated by the OBOS Index, gave early warnings that even a strong momentum stock like Meta was vulnerable to a pullback.

Don’t Get Wiped Out — Trade Smarter with Proven Indicators! 🧠

The recent momentum stock crash is a stark reminder of the market’s volatility and the importance of having the right tools to navigate it. Relying on hype and hope is not a strategy.

TradeDots proprietary indicators, like the Momentum Crash Detector, Trend Reversal Confirmation, and enhanced OBOS Index, are designed to give you a data-driven edge. They help you:

• Identify potential crashes early: Get ahead of the curve and protect your capital.
• Confirm trend reversals: Avoid getting caught on the wrong side of market shifts.
• Make informed trading decisions: Trade with confidence based on clear signals, not gut feelings.

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Subscribe to TradeDots exclusive indicator suite today and gain access to the tools the pros use! Don’t let market crashes wipe you out. Arm yourself with the knowledge and indicators to trade smarter, not harder.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing involves risks, and it’s important to conduct your own research or consult with a financial professional before making investment decisions.

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