Fundamentally, ContextLogic (NASDAQ:WISH) is a tough proposition to take seriously under the present circumstances. If we were to assess e-commerce platform WISH stock in the context of pre-novel coronavirus, it might be a speculative opportunity worth pursuing with your risk capital. But due to the overwhelming disruption of Covid-19, the concept of recommending shares borders on the irresponsible.

Let me clarify before my words get taken out of context. I’m not suggesting that anyone who has a bullish interpretation of WISH stock is doing something reckless. However, to treat ContextLogic as the equivalent of buying an established e-commerce name like Amazon (NASDAQ:AMZN) is not doing the reader justice.

This is especially the case because WISH stock has become a meme trade — or at least a stock with meme-ish qualities. Further, the enticing nature of these trades, replete with commenters characterizing market activities as a good-versus-evil narrative against short traders, adds more risk to the reader who many not fully understand how stocks function.

Given this broader framework, I cannot in good conscience play into the circus surrounding WISH stock. Even the underlying company’s Form 10-K lists out many of the concerns facing ContextLogic, in particular, a rise in shipping costs leading to higher product sales prices on its platform. With the firm specializing in tchotchkes from China, a margin squeeze would be awfully problematic.

Nevertheless, social media has gravitated toward WISH stock and that leads me to caveat my warnings about the “opportunity.” While you won’t see conservative investors pile into ContextLogic shares as part of a portfolio of stable, balanced stocks, the power of coordinated trading has been confirmed time and again.

So, is there a possibility of making money with WISH? Absolutely! But you best be prepared for volatility.

WISH Stock Reflects the Allure of Pareidolia

As anyone who has had the joy of writing about WISH stock — and paying the consequences of having the “wrong” opinion about it — knows, it’s a highly technical name. By that, I mean its loudest supporters are huge fans of technical analysis.

Per a compilation of tweets provided by InvestorPlace writer William White, WISH stock is a favorite of those who believe in various iterations or derivatives of Elliot Wave Theory. In short, this principle asserts that publicly traded assets move in identifiable waves or cycles. By deciphering which wave you’re in, you can determine where you are in the broader scheme of things and make profitable trades.

Believe me, I have no issues with the technical approach. In certain sectors where it’s not feasible to perform fundamental analysis — such as cryptocurrencies — Elliot Wave and its derivatives may be the only approach.

However, I would be lying if I said that the technical approach didn’t have issues. Mainly, the nagging criticism is pareidolia or the identification of patterns where there are none. Usually, the media mentions pareidolia in a comical sense, such as folks seeing Jesus on their toast. But it can have real consequences when you’re seeing stuff in the market.

I mean, lots of people see stuff in the market. But the difference for meme traders is that they’re putting real money into patterns that may or may not exist.

To be fair, technical analysts will often characterize certain established patterns as “high-probability trades.” That might be the case for several stocks. But for WISH in particular, it’s difficult to say that its proponents are banking on real patterns.

Nothing Wrong with Common Sense

For instance, WISH backers were wrong at $20. They were wrong at $15. And when WISH crossed above $10 after a series of disappointing trades, it appeared that the bulls were justified in their optimism.

But as the chart shows today, it was pareidolia.

Sure, you can also make the argument that WISH stock is now too beaten up to go lower. But again, proponents made that same argument when it dropped to $18, then $17, then $12, then $7.50. Each time, WISH provided some hope, only to frustrate.

At a certain point, you’ve got to use common sense. Most people should avoid WISH stock due to the proven volatility. But if you do trade it, you should only approach it with a short-term perspective. It has yet to prove worthy of a long-term commitment.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.