Stock Prices for This Early AI Play Might Continue to Rally
After a high-profile announcement, an AI company saw a short-term stock price rally that might become something more.
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SoundHound AI SOUN announced on Wednesday that it would be enabling live "voice-assistant integrations" with carmakers like Stellantis in Europe. The stock rallied sharply as a result, with carryover buying early Thursday.
Is this a short-term pop or is there more to this development? Let's check out the charts and indicators of this early AI play.
In this daily bar chart of SOUN below, I can see that prices made a sharp rally on very heavy volume in February and March. Prices corrected lower in April and bounced in May before making a higher low in late June and early July. Prices stopped short of a test of the rising 200-day moving average line and have quickly rallied back above the 50-day line which is bottoming.
The trading volume has increased recently, but it pales in comparison to the turnover in February and March. The On-Balance-Volume (OBV) line has weakened since March and shows a very slight increase in recent days. The Moving Average Convergence Divergence (MACD) oscillator is close to crossing back above the zero line.
In this weekly Japanese candlestick chart of SOUN below, I see a mixed picture. Prices are making a large potential bottom pattern. Prices are trading above the rising 40-week moving average line but trading volume has not been expanding in the direction of the trend. The OBV line has moved sideways to lower since March. The MACD oscillator has been correcting lower since March but remains above the zero line. I get an impression from this chart that more base building is likely, as opposed to an imminent rally.
In this daily Point and Figure chart of SOUN, below, I can see a price target of $9.25.
In this weekly Point and Figure chart of SOUN below, I can see a potential price target near $10.
Bottom line strategy: SOUN could continue to rally if they announce more buyers of their voice products but a pullback into the $5 to $4 area again would not surprise me.
Stay nimble.
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