RWT

Summary

Sell RWT (Redwood Trust, Inc.): sell into 3.78-3.80 and 3.86-3.93, do not initiate new longs for dividend (ex-div Sep 23 passed for RWT Redwood Trust, Inc.); short bias with small size given ATR 0.17 (~4.6% of price) using 0.17-0.34 stop width; invalidation is two settled closes above 3.90 holding above VWMA; settled loss of 3.68 on expanding volume targeting 3.30 then 3.08 flush low; 5 trading day horizon into Sep 30 payable expecting choppy to soft price action for RWT Redwood Trust, Inc.

The case

Our analysis is bearish on RWT (Redwood Trust, Inc.) and supports a Sell. Our analysis shows downtrend intact and basing not breaking out: volume-confirmed crash Sep 10 4.07 to 3.47 on 43.38M vs <1.5M normal, chop 3.66-3.93 with settles 3.72, 3.68, 3.72, price below 10-day ~3.78 and ~13% below 50-day ~4.28 and well below 200-day ~4.86, RSI ~38 stalled under 50 after 43.65 peak, MACD -0.17 histogram +0.01 whipsaw fuel, ATR 0.17 elevated. Fundamentals for RWT Redwood Trust, Inc.: P/B 0.54 on book 6.90 looks cheap but D/E 2939, assets +35% to 28.8B funded by debt to 27.2B while equity fell to 933M and cash fell, OCF -3.7B funded by 10.2B debt issuance, 19.35% dividend costing 24M/qtr uncovered with deeply negative FCF, razor margins though NII doubled to 32M and net loss narrowed 98M to 1.1M still breakeven, TRS GAAP loss, 2.68B marginable + 297M converts due June 2027. Sentiment/news for RWT Redwood Trust, Inc.: ex-div Sep 23 passed payable Sep 30 so no capture, 128% IV + a market fear gauge at 34.4 + elevated put OI 1.66 + overhead convert hedging, insider cluster + 9% 13D supportive but not breakout catalyst. Our analysis to Sell into 3.78-3.80/3.86-3.93 with invalidation two closes above 3.90 and confirmation below 3.68 captures asymmetry (downside to 3.30/3.08 vs upside through 3.80/3.90/4.28-4.49/4.86). Prior Sell on 2026-09-15 mistimed RSI-teens bounce through 10-day near 4.12; lesson requires confirmed rejection with RSI stalling below 40 and close back under VWMA, plus discipline around oversold bounces requiring confirmed breakdown volume when coiled. Now RSI 38 meets stall criterion and price at 3.72 remains ~3.9% above VWMA ~3.58 with fading volume, and with no settled loss of 3.68 on expanding volume yet the risk/reward still favors Sell into strength for RWT Redwood Trust, Inc. and holding through breakdown.

What would weaken it

• Oversold bounce through 10-day near 4.12 on short-covering
• Insider cluster + 9% 13D support limits downside
• Two closes above 3.90 holding above VWMA invalidates