Update: Neutral Tandem

This is an update to the TNDM Trade I entered about a week ago.



Trade Summary
I shorted the stock at 22.60 and got out of half my position at 21.22 and the rest at 22.15 when the stochs made a bullish reversal (orange circle). Made a decent amount of profit on the trade.

Current Situation
The stock is still on close watch for me because although it has gone up recently the bearish signs are still pretty strong (see below). As I had mentioned in my original post, I believe we will be seeing an ABC correction that is an overall wave 4 of a 5 wave downtrend (marked on the chart). So, essentially, I got in on the top of wave 4-A, and got out at bottom of 4-B. We are now going on 4-C. I believe 4-C should be coming to an end soon - my time series analysis said that it should have ended by 10/7. My next target is 10/15, but it could happen any time because I do believe the correction is a bit overextended.

Bearish Signs
First and foremost, the volume has been very light, and generally falling, since mid-September, showing that there is little conviction in this uptrend/consolidation. I have already talked about the E-Wave aspect of the downtrend that predicts a down move soon.

The candlesticks are moving higher but are colored red. What this means is that the stock opens higher but over the course of the day, the bulls are not able to sustain the stock price and it falls - this is a very bearish signal.

The MA are all falling in conjunction signifying that the bear trend is not over yet and we are still in a correction period.

Finally, the Stoch indicator is bullish. However, we are quickly approaching overbought zones and if the Stoch makes a bearish reversal, I will be shorting the stock again.

You might say that, "Well, the market is going up again and it is generally bad practice to short while we are going up". Although I generally agree with that, TNDM has shown not to follow the rest of the market in the past. On the above chart you can see how the stock has fallen. In the same time period the market has mostly stayed sideways and even risen a little. The beta of TNDM is a mere .5, signifying further that the stock has little covariance with the market.

-Wown
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