Is your portfolio in distress? Without passing judgment of how you play the market, SOS (NYSE:SOS) may be here to help. Let’s take a look at what’s happening off and on the price chart of SOS stock, then offer a well-aligned risk-adjusted determination to keep investors afloat.
If we’re to trust what Yahoo Finance says about SOS, the company is a China-based cryptocurrency, data mining and analytics outfit. What’s more, SOS’ business tendrils also include cloud-based medical, auto, and financial emergency rescue services.
At face value it certainly sounds like there’s a whole lot going on at SOS. And to be sure, SOS stock offers plenty of buzz words associated with promising markets.
Can SOS sell you the Brooklyn Bridge too? Maybe, but only if you’re not alert of what’s really going on.
SOS Stock and the Reddit Universe
The more widely followed and well-worn reality is SOS’ place within the Reddit universe. Yup, SOS is yet another stock marked for muscling by retail traders trying to level the playing field on Wall Street.
Famously of course, Redditors seeking hidden publicly traded treasures on Wallstreetbets have made heavily shorted stocks and left-for-dead companies like GameStop (NYSE:GME) and AMC (NYSE:AMC) into sensational short-squeeze plays.
Whether investors frown upon such behavior or not, the folly has, through well-placed secondaries, helped create the possibility of longer-term leases on life for each of those companies. So could SOS be the next real deal offering a more enduring and bullish big picture for its investors? Probably not.
Unlikely to Stick Around
On Thursday, SOS jumped 16%. The bid was wedged in-between GME’s gain of nearly 5% and AMC’s popcorn worthy 36% thriller. But don’t take SOS’ strength for granted. Realize SOS checks all the right boxes for a stock that’s highly unlikely to stick around.
From SOS’ foreign domicile, lack of Street coverage, lower-priced shares, small-cap valuation and 10% short interest, when it comes to SOS stock “it is what it is.” And today, reaching for more meaningful explanations of longevity – such as shares finding strength due to a bid in Bitcoin (CCC:BTC-USD) or other rushed and hopeful rationalizations – is silly.
At the end of the day, if you’re thinking of buying or are long SOS stock, just welcome the reality of a pump-and-dump campaign in progress. Don’t believe SOS is the next GME, AMC. Or more foolishly think it’s the next Apple (NASDAQ:AAPL) or Netflix (NASDAQ:NFLX). And if investors can do, they should be OK.
SOS Stock Weekly Price Chart
Source: Charts by TradingView
A look at SOS stock’s weekly price chart hints strongly at the possibility this week’s engulfing reversal candlestick could find follow-through next week. A downtrend line has been broken, an oversold stochastics is properly aligned and curling up. And, volume is coming in above average and showing the largest interest in more than a month.
That’s the good news. Or at least, it’s the carrot to draw SOS investors in.
The downside to SOS stock is what’s already been cautiously stressed and where second chances on the price chart are much less likely to take hold. As well and given recent warnings by SOS’ less-than-bullish green volume spikes, overstaying one’s welcome should prove a costly mistake.
Bottom line and first things first though, reasonably $4.50 to $5 isn’t out of the question. And with shares near $3.70, maybe SOS makes sense to some investors?
There’s no judgment here. But if you’re like me and appreciate it is what it is, SOS isn’t in position to save the portfolio, either.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.