MDC Harmonic: Bat Pattern

2022년 11월 11일

M.D.C. Holdings, Inc. provides homebuilding and financial services. Its homebuilding operations consist of wholly owned subsidiary companies that generally purchase finished lots or develop lots to the extent necessary for the construction and sale primarily of single-family detached homes to first-time and first-time move-up homebuyers under the name Richmond American Homes. MDC has a moderate quantitative fundamental score (Greater than 5) with good analyst prospects (Buy and Hold ratings). Furthermore, MDC has a fair dividend pay out @ 1.64 per share/year (5.12% of current share value). Therefore, this MDC long play has good value at this price-level (32.07).

In this idea, we have a bat-pattern reversal and two price targets. I set the stop-loss for 3.37%; however, I'd consider carefully 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 will sell half of my position and set the stop-loss to trail the position by the 'Average True Range'. Once price has reached the 0.618 target, I will sell the other half of my position. The first target nets 28.2% and the second target nets 55.25%. 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 41.84% of their original investment.

Good luck and trade safely!