- SOS shares continue to stabilize despite Bitcoin's bumbles.
- The cloud-services-turned-crypto-miner's shares are a well-followed retail meme stock.
- SOS sheds 2% in Wednesday's pre-market after a strong showing on Thursday.
SOS is a Chinese company involved in providing cloud-based emergency services to businesses and individuals. SOS provides information security solutions for emergency roadside assistance, emergency healthcare and emergency living assistance. SOS also has an involvement in the cryptocurrency mining business.
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SOS stock forecast
SOS shares have been strong in 2021 with a gain of 190% plus so far. The main reason for this has been the company getting involved in the cryptocurrency mining sector and blockchain.
SOS is the subject of much hype, rumor and frenzy, so it needs to be treated and traded accordingly. This is not a Buffet-style, long-term play. It is a stock to trade the momentum, reap the rewards and get out before it is too late. So careful risk management and identifying key chart points and trends are important.
The initial spike up to nearly $16 was too fast, too furious as SOS was much too stretched. This was peak GameStop retail frenzy. This spike has never come even close to being matched. Further spikes gave us the downward sloping trend line that SOS broke through on April 7. SOS shares rallied 28% on this day amid rumours of a short squeeze across many social media sites.
Since this aggressive move, SOS shares have fallen steadily. This move also failed at the significant 100-day moving average resistance.
Now we have some confusion in the chart. Ordinarily, we have bearish signals as SOS has broken the lower range line at $4.25. MACD is still crossed into bearish territory and the DMI is also crossed into bearish territory. To trade the bearish view effectively use the $4.67 area to initiate short positions as this is resistance from the 9 and 100-day moving average. A tight stop should be used on a break of these averages. A break lower leads to a target of $2.77. It should be noted given the volatility in retail meme stocks that going short is better achieved using put options to manage risk.
Tuesday has produced a bullish engulfing candle, which may halt the recent slide. Taking a long position the initial target will be the convergence of the 9 and 100-day moving avearges at $4.67 and further resistance/targets are at $5.16-$5.36 from the 21 and 50-day moving averages. The April 7 high of $6.17 will be the pivot for any bullish move. Here it may be prudent to significanlty reduce longs.
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