How will the critical Scorpion report and ensuing lawsuit affect Soleno Therapeutics' short‑term stock volatility?

The scathing Scorpion Capital report and the Hagens Berman shareholder‑rights suit have already triggered a sharp sell‑off in SLNO, turning the stock into a short‑term volatility engine. On the technical side the shares broke below the 20‑day moving average and the $1.20 support line, snapping a modest up‑trend that had held since early‑May. The break has opened a “volatility‑bounce” zone: the 20‑day EMA, the $1.15‑$1.20 range and the 50‑day SMA now act as the nearest price‑levels that could absorb the swing. Expect the average true range (ATR) to expand 30‑40 % versus the prior 10‑day window, and intraday price swings of 5‑7 % are likely as traders price‑in the pending legal exposure and the credibility of the Scorpion findings.

Fundamentally, the report calls out questionable data in Soleno’s lead‑generation platform and the lawsuit alleges potential securities‑law violations, both of which amplify downside risk until the company can provide a credible rebuttal or disclose mitigating data. In the absence of a clear, positive catalyst (e.g., a management rebuttal, a favorable court filing, or a reassuring earnings update), the market will remain skewed toward risk‑averse positioning, prompting short‑selling and stop‑loss hunting. Actionable take‑away: stay short‑biased or hold a defensive put position with a tight stop just above the $1.20‑$1.25 resistance band; if the stock rallies back above the 20‑day EMA on any positive news, consider a quick scalp with a stop at $1.25, but be prepared for a swift reversal back into the volatility‑driven downtrend.