SoundHound AI Shares Surge After Institutional Ownership Report

Investors take note of strong institutional backing.

Shares of SoundHound AI, Inc. SOUN are rising notably this Tuesday. Analysts attribute this increase to a recent report indicating that institutional investors own over 30% of the company.

Although the stock is climbing, it remains trading within a well-established range, which suggests potential for low-risk trading strategies. For this reason, SoundHound has been selected as our Stock of the Day.

Profit Strategies for Rangebound Stocks

Traders have a couple of avenues to profit from stocks that are trading within a range.

The first strategy involves selling near the range’s peak and purchasing close to its bottom. Yesterday’s Stock of the Day highlighted this tactic using ResMed Inc. RMD.

At the peak, known as resistance, stocks may decline when they encounter selling pressure. Conversely, at the bottom, referred to as support, stocks may rise when buyers enter the market after the price hits this level.

Trading Breakouts and Breakdowns

Another method for trading in a range involves watching for breakouts or breakdowns.

Read Also: Trump Prepares Maximum Pressure On Iran: Oil Jumps Above $73, Energy Stocks Rally

Resistance exists where many shares are offered for sale at similar prices, which can result in a pullback when stocks hit this barrier. Sellers often compete against each other, leading buyers to transact at the lowest price available.

In some instances, buyers may overpower sellers, allowing the stock to break through resistance — a phenomenon known as a ‘breakout.’ Breakouts can indicate a bullish trend as previous sellers exit the market, requiring buyers to pay higher prices, potentially initiating a new uptrend.

Support acts as a price point with substantial buyer interest. When stocks rebound from support, it often leads to heightened competition among buyers, pushing prices higher. However, if sellers dominate and push below this support, it is termed a ‘breakdown,’ typically viewed as a bearish signal, suggesting a new downtrend may emerge.

Read Next:

Image: Shutterstock