banjo_nz

PROG withstand the short raid! but will it continue?

Long
NASDAQ:PROG   PROGENITY INC
PROGENITY! Lets follow the money.

Thesis: Why did Progenity performed an impeccable comeback from the short raid today?

Lets pretend that you found PROG the day before the market opened today and you are looking at the candle stick marked with a white arrow.


You'll probably looking for a concerete answers on these questions:

1. Is this an overbought territory?
2. If so, what share price ( SP ) should I buy?
3. What are the technical indicators to help me with my entry?
4. Are there any fundamentals that I need to know about?


Question 1,2,3

Using the 1 Day chart, there is one one indicator that stands out for me and it is the StochRSI. We also need to consider the total percentage gains for the last 10 days or so, which is at whopping 92.45%. You
will noticed that I used the doji as a start of the measurement because from a "candlesticks" perspective, this is often a reliable reversal indicator after a long downtrend. Thus, from a 1 Day perspective it suggests to me that its only a matter time that a pullback would occur because long holders is at the "apex" of their eupohoria and likely in a defense mode to lock their profits in by using "stop loss". If it occurs, the rest of the indicators ( MACD , CMF , and ADX DI-/DI+) suggests that the current bull trend is unaffected. Therefore, it is primed for a pullback, but where should I place my buy?





If you look closely, and pretend that today's candle didn't exists. You will see that the SMA50 was broken from the last previous session. When this occurs, "usually" but not always, the SMA becomes the next support. The daily chart however is an aggregated view of the trading day. So, the next sections we will evaluate the time period from 2H and 4H because what occurs in the shorter period could happen in the longer period.

*2H period suggests the following by analysing the chart from top to bottom*:



1. StochRSI overbought
2. Second session on that day is a hammer , something to pay attention to with volume .
3. Broke SMA200, a good thing.
4. A big volume , an early indication of change
5. ADX /DI is slumping, not good.
6. CMF contradicts the others.

*4H period*


1. StochRSI overbought
2. A bearish getaway pattern
3. some volume
4. ADX /DI is slumping
6. CMF contradicts the others.

*1D period*


1. StochRSI overbought
2. A bullish candlestick
3. Broke SMA50 and approaching SMA100
4. Massive volume
5. Bullish ADX /DI
6. Positive CMF .


From 1D standpoint, it looks as if there's no indication but from the price duration of the SP appreciation perspective. It would need to flush out the weak hands. 1D suggests that it will test at SMA50 ($5.50). 2H suggests that it will test SMA150 ($6ish), and 2H suggests that it will test the SMA200 ($5.50is) because its been running to high too fast lately and it need to test the psyche of the stock. Hence, I decided to place a AH+GTC bid of $5.50 the day before the trading opens. True enough, it did happen.

*Why did it go up immediately after the short raid?*

Two thing that stands out for me significantly is the recent purchase of the CEO (ref 1) , fast fulfillment of the senior convertible notes (ref 2,3) and the expansion of COVID-19 RT-PCR testing across US (ref 4). These only means one thing for me, their going to smash their revenue this quarter because US is experiencing a second wave of coronavirus and viability of amassing large quantity of COVID19 testing is essential to control the pandemic.

*So where do we go from here?*
There's two areas of key resistance here, the SMA100 and the $8.00. However, PROG is in the business of selling RT-PCR testing and the likelihood of an ongoing higher demand and revenue from 4Q and beyond is imminent.

*Conclusion*

Using the 2H and 4H are useful charts to determine if there is likely a pullback or short raid to occur and determining the "likely" bargain share price because 1D is slower than 2H and 4H. Make sure that you use exactly the same indicators from all three period to ensure the consistency of the results. It is important to analyze the fundamentals of the stock and the externalities that may affect the stock movement. In this case, its COVID19 and the worsening condition of the pandemic. I hope that PROG will make a significant contribution to control the virus so our friends and family in the US achieves normalcy like here in NZ .




Reference:
1. Stylli Harry, Chairman and CEO https://secfilings.nasdaq.com/filingFram...
2. Athyrium Capital Management, LP https://secfilings.nasdaq.com/filingFram...
3. Athyrium Opportunities Fund (A) LP https://secfilings.nasdaq.com/filingFram...
4. https://finance.yahoo.com/news/progenity...
Trade active: Size: 1000
Share Price: $5.50

Target: $8.02
Trade closed: target reached: I made some adjustments to my exit strategy and decided to take my profit at $7.50

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