Quasi-neutrality prevails, where money manager and investor sentiment, in essence is somewhere between relaxed on the downside risks (risks but not too dramatic), yet reticent to play for further upside, especially in an expensive S&P along with stratospheric prices in just a few, like the 'magnificent seven'.

Freepik

This actually is about what we've looked for, ie: a 'softish' economic landing, a Fed that is either done or near done with preceding monetary tightening, with a segment of investors (not just Gen Z or millennials) interested in growth and not obsessed with Fed policy, as the senior money managers were for years, a contributing factor to how they missed the upside for such a long time.

There is a point to that: that performance-starved segment of managers has a great desire to show results in this 2nd half of 2023 and position for 2024 later of course (in-essence for many buys during pullbacks this year their eyes now are focused on moves into next year, aside short-term scalping programs).

And that is a dilemma in a sense because we all know the market tends to be sluggish or downright heavy in the August-September time-frame. But it's also why I've suggested -barring existential black swans actually attacking- we're likely to see the money managers looking at declines for buying, not selling.

In-sum: 

S&P strength sees end of 'tightening cycle'. It's why FOMC meet gets little attention, hopefully Feds won't press hawkish with more outrageous 'stay the course' talk . Regardless they're done or one & done. Accept 3% inflation.

Basically this market is shuffling and almost treading water ahead of FOMC.

Under water is how I'd describe the mood after the Close around a stock that I had questioned 'overhead supply' and ownership 'structure issues', but like for sure what they were or are working on, that of course was SoundHound.ai (SOUN).

I say 'was' instead of 'is', as now the Company has something to prove if they have any intention of encouraging shareholders. In a long discussion with the IR Director last week, after (I had thought) being put-off a couple weeks, there was reticence to say much, given what he described as a 'quiet period' ahead of next month's Q2 earnings report, and that made sense.

Weeks earlier he said the challenges about insider selling and legacy holders was 'bogus' as there was no issue. In the last conversation he said there were 'no hiccups' on the horizon, and although I can't differentiate if he merely had in-mind 'product development roll-outs' or something else, I did have faith his comments about customers often being major company big investors as true, and I suspect that's indeed the case.

The problem was and is there has been lots of heavy volume selling that was somewhat absorbed by interest in Ai. So, they wanted to avoid 'high borrowing costs' presently, and they did a huge 150 mil. At The Market offering today. I'll note that sometimes companies take months to complete an ATM and that's a normal situation especially when it offers shares sometimes to investors who can be the same companies that use the product. Also let me take the Filing at face value, they mentioned 'Acquisition Strategy', and while we don't know if that's what this might be about (emphasis on might), it creates another way to interpret, as it could turnout to be favorable for SOUN, ultimately. Shrug.

This is more about feelings of being led down a primrose path or something. I was told structure concerns were bogus, as I mentioned. Really? So SOUN is likely to washout and run higher (depends on what they say in August's Call), but integrity matters. And although I suspect they won't want to talk with me in the future, I feel a bit bamboozled even though we only suggested the shares under 2. And I'm unsure I want to talk to them, as though this is capitalism, it comes soon after entirely opaque chats with me. Hindsight is 20/20 about the run to 5, and likely this creates a lower trough (a double bottom test?), then it takes off. But I simply still feel I got used, and/or a California crowd managed to got tied-into a certain (slick?) brokerage firm that has history. Or maybe not.

I see SOUN potential, might even add to positions in a washout, but also feel embarrassed in this (and it's not the first time), even if it goes up dramatically, as I was told 'no hiccups' and 'not' financed like an ATM as biotechs often are. I apologize for getting excited about speculative stocks in-general or what I'm presuming was an absence of transparency that we apparently sensed weeks ago, but that's of course a function of everything else Ai being overvalued.

Yes, an ATM is normal financing for a small company needing funding, it's just seemingly sketchy heavy trading by insiders (legacy of executives) that was a reason for the requested chats, so hence I feel blindsided. Whether it was just a misunderstanding, or indeed sketchy. I express no opinion or knowledge on that, just on the surprise of this out-of-the-blue offering. (I think they had said funded for 2 years, that's why this is surprising too, if they did say that.)

Again, a SHELF registration for the next 3 years assumes funding operations and is indeed a reasonable approach for a research-intensive young tech firm that actually has hot-stock potential. I said this weeks ago: it's perception that there is excessive insider and legacy holding selling that holds it back. Today just emphasized the confusion SOUN financial engineering gave its investors.

We'll continue following SOUN, but with questions of trust having surfaced as can also happen sometimes validly, sometimes not. Did recent selling insiders know an offering was coming? I don't know. I do presume these things take a team of lawyers weeks to prepare, and that profiting on inside information is still not cool, but the lawyers tend to handhold executive so they have what's a version of 'plausible deniability' as to knowing anything was coming, even the CEO selling a good chunk in recent weeks (you may recall I asked about that and was told it was an 'infinitesimal small portion of overall holdings). I'll take another beta-blocker to limit my BP, and we shall see how it behaves (down and up?) in the a.m. (Unsure if I mean my blood pressure or SOUN).

Here I brought up the 'structure' issue a few times in recent weeks, and they deflected it. I feel blind-sided, rightly or not. Yes SOUN might double, triple or more eventually, and I hope it does. But I'm frustrated in how smoke & mirrors this seems, and I feel obfuscated by Ai excitement, while insider/legacy sales tactics have a questionable aroma, I questioned and got deflected (burned?).

Maybe I was on the trail after so many years of smelling the coffee. I may be mistaken. No assertions against the company or IR, just my mood now at the surprise offering. I must now get calm. Time for a 2nd extra beta-blocker and off to the gym. It will be interesting to see if this stock dips and the sellers over recent days and weeks become buyers, as if they suddenly discovered value.

Bottom-line: 

Aside being pickled, not pink (maybe red in the face from high blood pressure), I think the stock in-question will probably find buyers into the weakness and turn up. At least we entered at 2 or under and not 5.

Anyway, I apologize for focusing on this so tomorrow I'll return to the broader market perspective. Doesn't matter today since it's a shuffling pre-Fed day.

More By This Author:

Market Briefing For Monday, July 24 '23
Market Briefing For Wednesday, July 19
Market Briefing For Tuesday, July 18