Friday 28 June 2024

Futures make stocks look easy

but learning them is key to becoming a great trader
 
   
     
   
 
JUNE 28, 2024
   
GEOF SMITH'S TAKE
If You Learn Futures, Stocks Are Easy
 

A while back, I wrote about how I got my start in the markets and I offhandedly mentioned, “If you learn how to play futures, stocks are nothing.”

Well, that resulted in some questions — namely, how exactly are stocks easy, Geof?!

It’s not that stocks are easy. It’s that futures introduce a lot of differences based on what you’re trading, while stocks are consistent all the way across.

But it doesn’t stop there… seasons, weather, and the 24 hour nature of futures complicate things further…

Still, if you can muscle your way through futures, you’ll make your stock trading life much easier.

— Geof Smith
 
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SCOTT WELSH’S TICKER TALES
Friday Great Value Trade (POET)
 

One way to catch big winners is by being a Deep Value trader.

If you buy something deeply on sale, you make a big profit when it gets back to “fair value”.

And if you do that process on a small-cap stock, the wins can potentially get even bigger.

Several months ago, my scan came across a small Canadian semiconductor stock, Poet Technologies (POET). 

At that time (around November 2023), POET was down below its lower Band (standard deviation of -2) and far below the 800-day simple moving average. 

Here’s the chart:

 
 

At that moment, it was trading for about $1.00 and the moving average/”fair value” level was up around $5.50. 

In short, there was a massive amount of possible upside.

What happened?

It’s moved up over 100%, as you can see, and “fair value” is still far above (over $4). 

Taking a big win would’ve been possible at many different points. 

But it’s still going. 

And I’m still watching.


Happy trading,
— Scott Welsh

P.S. As a reminder, these plays are based on my longer-term Weinstein Stage Analysis method. The charts above use weekly candles and a 30 week simple moving average. For details on this method, see my explanation on this Ask The Pros episode starting at timestamp 20:45.
   
 

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