Day appeared as if he might lead by two at the completion of day two but a bogey at the reachable par five last, when he pitched into a green side bunker from just 35 yards, cost him any chance of the outright lead.
Palmer recovered from a roller coaster start which included three birdies, a bogey and a double bogey in his opening five holes and another mid round hiccup to birdie the last and share the lead.
Day moves to the top of the projected FedEx Cup points table and Palmer to number two but under this format things can and do change quickly.
32 players are within six of the lead and all would still consider themselves some sort of chance. Those players include Jim Furyk at 4 under and Rory McIlroy at 2 under.
Not in that group but a player who might yet play a part is Adam Scott whose eagle at the last kept any remote chances alive.
John Senden is 23rd, Geoff Ogilvy 33rd, Matt Jones 63rd and Steve Bowditch and Marc leishman right on the cut line in 70th position.
Stuart Appleby was the only Australian to miss the cut but his performance last week in New Jersey was enough to ensure he will advance to the BMW Championship next week in Colorado.
Ogilvy would appear the only Australian in danger of missing out on a start at the BMW Championship and will need to improve over the weekend.