CWH: Monthly Bat/Crab ConfluencesCamping World Holdings, Inc. operates as a retailer of recreational vehicles (RV) and related products and services. It operates through the following segments: protecting, insuring, and promoting the RV lifestyle and RV & Outdoor Retail. CWH has a Medium STRONG quantitative fundamental score (Greater than 6) with great analyst prospects (Strong Buy and Hold ratings). Furthermore, CWH has a VERY GOOD dividend pay out @ 1.19 per share/year (Approximately 8.8 - 9.67% of the entry range a 13.51 - 12.30). Therefore, this CWH long play has GREAT value at the price levels from 13.51 - 12.30.
In this idea, we have a crab and bat-pattern with a smaller deep-crab recently formed in the right arm, showing us that price should reverse between 13.51 - 12.30. I expect price to have a long-term reversal within this range. I would average into this position with a 3% stop below 12.30. 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 95.4 -114% (Risk-to-Reward of 31.46) and the second target nets 160 - 185% (Risk-to-Reward of 52.68). 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 148% 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: 31.46
Bankroll:$1000
Calculation:
Kelly Criterion (Adjusted) - 0.9278
Bet This Much (Adjusted) - $927.77
SECOND TARGET
Probability: 0.93
Odds: 50.27
Bankroll:$1000
Calculation:
Kelly Criterion (Adjusted) - 0.9287
Bet This Much (Adjusted) - $928.67
Therefore, one should bet approximately 92.7% - 92.8% of their normal lot size. Good luck and trade safely!
