Valentine’s Day and the Stock Market
One of my own stock market rules is to buy in the first week of November and sell by Valentine’s Day. This strategy aligns with the typical year-end rally while avoiding the volatility of October, when the market often experiences sharp downturns. For those looking at a broader seasonal pattern, another well-known approach is to buy in early November and sell in May, echoing the old market adage of avoiding the summer months. Indeed, in recent years, July, August, and December have not been ideal periods for attracting investors to buy stocks.
What is reassuring, however, is that just six weeks into 2025, the FTSE 100 is already up 6.8%—significantly surpassing the 5.7% gain it achieved in the entirety of 2024. Even the struggling AIM market, which continues to lose constituents, appears to be stabilizing, with a modest 0.9% increase so far, following three consecutive years of decline.
No Material Change
Despite these signs of recovery, the fundamental challenges facing smaller companies remain unchanged. Barriers to entry, high listing costs, and regulatory burdens continue to deter new listings. Despite ongoing efforts from various stakeholders to promote the benefits of public markets, the reality is that unless a company is a blue-chip stock, it will face significant hurdles. Even for blue-chip firms, the temptation to list on US exchanges remains strong, despite even stricter compliance requirements and higher costs. The key issue remains liquidity—small-cap stocks are still entrenched in a bear market, with only a few exceptions among investors and market-makers in the City.
Nevertheless, there are some early signs of improvement. Given my 35 years of experience in and around the financial markets, it would be tempting to compile a guide to the best brokers, trading platforms, lawyers, accountants, auditors, and PR firms. Perhaps one day, when there is no risk of such a publication coming back to haunt me, I will. What I can say, however, is that the market turmoil since the pandemic has certainly separated the wheat from the chaff.
Bulletin Board Heroes
Speaking of green shoots, one reliable indicator has been the stocks featured in the Bulletin Board Heroes charting videos, which have been published daily for over 12 years. Recent multi-bagger risers such as Zenith Energy (ZEN), Eurasia (EUA), Trellus (TRLS), and Xeros (XSG) have all been highlighted in recent weeks. More encouragingly, the resurgence in promising stocks has been broad-based, with many other potential winners not making the cut simply due to the sheer volume of setups.
While companies understandably promote themselves through interviews, articles, and presentations, what most retail investors truly want to know is when to buy and sell—something a CEO cannot explicitly advise. Instead, the familiar phrase “our stock is very undervalued” is often used—a statement that, in the context of the London market, is almost always true.
The Model Portfolio
A common criticism of the Bulletin Board Heroes is that the sheer number of stocks featured makes it difficult for investors to focus on the best opportunities. A stock like Eurasia (EUA) may be highlighted at 2.7p and later identified at 4p and 8p based on technical signals, but with so many setups appearing at once, some investors may struggle to act in time.
Additionally, the small-cap space is plagued by one- or two-day wonders—stocks that experience brief surges before stagnating. To address this issue, I am considering a Model Portfolio, which would feature only the strongest technical setups. These would include classic patterns such as:
- Bear trap island reversals
- Gaps off the low
- Sideways consolidations above a rising 50-day moving average
For example:
- Zenith (ZEN) formed a bear trap island reversal followed by a sideways consolidation above the 50-day moving average.
- Eurasia (EUA) also consolidated sideways above the 50-day line from 2.5p.
- Xeros (XSG) consolidated at 0.52p for over three weeks in January and early February before more than doubling in just ten days.
These setups not only tend to be successful but often produce substantial gains.
I believe in the Model Portfolio concept for two main reasons. First, at the end of the day, investors and traders are primarily focused on making a profit. Second, if this approach proves successful as a theoretical exercise, it will silence many skeptics. Of course, this is intended as a guide, not an inducement to action—even the best setups can lead to consecutive losses. I will publish the first Model Portfolio update soon.
This Week’s Top Performers
The standout winner this week was Eurasia (EUA), which has been flagged here as a Trump Trade ever since he won the election. The stock surged following reports that Trump and Putin may hold talks aimed at ending the war in Ukraine. This optimism also boosted Cadogan Energy (CAD), which operates in western Ukraine and could benefit significantly from a peace agreement.
Director share purchases lifted Xeros (XSG) following a letter of intent (LOI) with a distributor. Notably, the technical signals for Xeros appeared well before the fundamental news hit the market.
Another major gainer was Emmerson (EML). The potash company recently secured litigation funding—a strong signal, as legal firms typically avoid cases they are unlikely to win.
Stakebuilding activity drove gains in Light Science (LST) after it signed a distribution framework agreement with Gavita International B.V. earlier in the week. This partnership enables the company to distribute horticulture lighting products developed by Gavita’s subsidiary, Agrolux Nederland B.V..
Meanwhile, Audioboom (BOOM) continues to see a re-rating, as investors anticipate further positive news following last month’s adjusted EBITDA profit, which exceeded market expectations.
Disclaimer & Declaration of Interest:
The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.
