SBLK Harmonics: Monthly Deep-Crab/Bat
Updated
Star Bulk Carriers Corp. provides seaborne transportation solutions in the dry bulk sector. The firm's vessels transport major bulks, which include iron ore, minerals and grain, and minor bulks, which include bauxite, fertilizers and steel products. SBLK has a VERY STRONG quantitative fundamental score (Greater than 8) with great analyst prospects (Strong Buy and Hold ratings). Furthermore, SBLK has an awesome dividend pay out @ 2.25 per share/year (Approximately 23.6% of the entry cost a 9.57). Therefore, this SBLK long play has deep-value at the price levels from 9.57 - 7.23.
In this idea, we have a deep-crab pattern and bat-pattern showing us that price should reverse between 9.57 - 7.23. I expect price to reverse right at 9.57ish. I would set the stop-loss for 3%; however, I'd consider averaging into a position on this trade, if price goes below the stop (I don't expect it to). Once the 0.382 target is acquired, I would sell half of my position and set stop-loss runners to trail price by the 'Average True Range' of multiple timeframes. Once price has reached the 0.618 target, I would sell the other half of my position. The first target nets 97.3% (Risk-to-Reward of 31) and the second target nets 157.6% (Risk-to-Reward of 50.27). Averaging these percentage gains out and adding for the dividend (I would expect to hold this for at least one year), one would profit approximately 151% of their original investment.
Plugging in the probability for success of a deep-crab pattern and the R:R values into our Kelly Criterion betting calculator for an account of $1000, we get;
FIRST TARGET
Probability: 0.93
Odds: 31
Bankroll:$1000
Calculation:
Kelly Criterion (Adjusted) - 0.9277
Bet This Much (Adjusted) - $927.74
SECOND TARGET
Probability: 0.93
Odds: 50.27
Bankroll:$1000
Calculation:
Kelly Criterion (Adjusted) - 0.9286
Bet This Much (Adjusted) - $928.61
Therefore, one should bet approximately 92.7% - 92.8% of their normal lot size. Good luck and trade safely!
In this idea, we have a deep-crab pattern and bat-pattern showing us that price should reverse between 9.57 - 7.23. I expect price to reverse right at 9.57ish. I would set the stop-loss for 3%; however, I'd consider averaging into a position on this trade, if price goes below the stop (I don't expect it to). Once the 0.382 target is acquired, I would sell half of my position and set stop-loss runners to trail price by the 'Average True Range' of multiple timeframes. Once price has reached the 0.618 target, I would sell the other half of my position. The first target nets 97.3% (Risk-to-Reward of 31) and the second target nets 157.6% (Risk-to-Reward of 50.27). Averaging these percentage gains out and adding for the dividend (I would expect to hold this for at least one year), one would profit approximately 151% of their original investment.
Plugging in the probability for success of a deep-crab pattern and the R:R values into our Kelly Criterion betting calculator for an account of $1000, we get;
FIRST TARGET
Probability: 0.93
Odds: 31
Bankroll:$1000
Calculation:
Kelly Criterion (Adjusted) - 0.9277
Bet This Much (Adjusted) - $927.74
SECOND TARGET
Probability: 0.93
Odds: 50.27
Bankroll:$1000
Calculation:
Kelly Criterion (Adjusted) - 0.9286
Bet This Much (Adjusted) - $928.61
Therefore, one should bet approximately 92.7% - 92.8% of their normal lot size. Good luck and trade safely!
Note
I'm thinking the bottom might be in July - August, when commodities bottom, on this one.Note
Update: This is about to make a perfect short from around this price range, to around the designated long reversal zone in the idea.
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