SoundHound AI
I’m repeating myself, but its worth saying a few times.
SoundHound AI (SOUN) shares are trading 13% higher today as the stock found support at $5. To put it simply, $5 may be the make-or-break for this new AI player. Shares will face an immediate challenge at $6.
For those unaware, this stock was on a rocket towards $15 as they were rolling out their ambitious AI plans while posting year-over-year revenue growth of 80%.
But then a short seller’s report hit Wall Street a few weeks ago and reversed the stock back to $6 and then $5, where it sat yesterday.
Historically, this is a critical price for any stock, and it’s no different for SOUN.
Traders answered the call of $5 today as volume is now flowing more heavily into the stock. This indicates that the short-term traders are now “buying the dip.”
The levels are simple from here.
Watch for resistance at $6 and a break through that same price will fuel a new rally back to $7. From there, we’ve broken above the 20-day moving average, which will fuel another burst of buying in the stock.
Levi Strauss & Co.
Some interesting battle lines are being drawn in the retail sector.
On one side are the luxury names that we talked about yesterday. PVH (PVH), RH (RH), Ulta (ULTA), and lululemon (LULU) are all dropping through the floor, while more “Main Street” brands like Levi Strauss (LEVI), American Eagle (AEO), and Amazon (AMZN) are leading higher.
There are a few theories out there – I’ll share mine in tomorrow’s Morning Buzz, but for now, let’s just say that the upper-class consumer is sending a warning sign.
That said, LEVI is breaking higher on a great earnings report and healthy outlook.
The stock’s 50-day moving average has been bullish since early November and continues to indicate positive momentum.
We’re approaching $22.50, and you’re likely to see some profit-taking from this 60% rally in the stock. That would serve as a good opportunity to buy into this long-term bullish retailer as it heads to new highs above $28.
UnitedHealth Group
You want to see what a long-term warning sign looks like on a stock chart?
Look at shares of UnitedHealth (UNH). The stock has been in the news for the last few months as health insurance companies see more and more pressure to perform.
In January, UNH missed their earnings target by $0.15, despite posting steady revenue for the year. The reason… they’re feeling the same inflation pinch as you and I. The problem, they can’t afford to pop our premiums.
So, the stock shows the wear of being fundamentally challenged, but things are about to get worse.
UNH shares just completed a “Death Cross” pattern. It sounds ominous… because it is.
This technical pattern occurs when a stock’s 5-day moving average breaks below its 200-day. The pattern represents long-term negative momentum that is likely to continue pushing a stock even lower.
The Death Cross is happening while UNH shares are challenging the $450 price level. This was the same price that the stock found support at multiple times in 2022 and 2023.
But this time looks different as momentum and the fundamental challenges look to break that firm support level. When that breaks, more downgrades and selling are likely to target the $400 and then $350 prices.
There are two ways to approach this situation.
First, if I own the shares, I usually take my gains or losses and move to another opportunity.
Second, in these clear “bear cases” I consider using long-dated put options to profit from the outlook. Always make sure you have the correct education when trading options.
With earnings approaching on April 16, the stock is likely to see volatility that could break this stock lower.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.