Wheels Off The Wagon
I was almost not going to write a Week In Small Caps this week. A combination of getting a summer cold of the man variety, and various issues that I have endured in recent months, meant that the level of enthusiasm was not quite 100%.
That said, my near 40 years experience of the financial markets has been something of an uphill struggle, and this has centred around not only how difficult it is to make money in the markets, but rather more in terms of the people in this space. This is particularly the case at the small cap area of the market, but as we have seen with recent shenanigans at BP (BP.), it can be dog eat dog whatever the size of a company. However, of course, as we saw on Friday, the main battle is with the markets, not necessarily its participants, at least in terms of them being at arm’s length.
For instance, this week was the worst in years for crypto, something which almost exactly a year on from the Great Bitcoin Treasury boom of 2025. To celebrate this we have the major cryptos at new 2026 lows, with nothing apparently around to turn the tide. Apart from Smarter Web (SWC) buying BTC, around 25% above where we are currently, just some days ago, most of the players have gone rather quiet for some reason. This is not surprising is that one would guess that some already knew they were getting on a bubble bandwagon, and that others simply did not know what they were doing, and are now scratching their heads. Indeed, it is noticeable that companies that were combining mining with crypto mining or just buying, have gone back to their day job. Of course, the smart ones made sure they raised enough cash in the summer of last year to survive, although with many down nearly 50% on their entry points on BTC, the chickens could come home to roost. Indeed, a move down to the floor of the current BTC price channel on the daily chart near $40,000 could / should spell game over for many, versus the current position of wheels certainly having come off the wagon.
Those Who Can Do, Invest
This week I was very kindly invited out to lunch by an investor friend, who has rather become like a (slightly) older brother, one that I never had. I have to say, that given events in the recent past, this lack of an older male sibling has been something of a gapping loss. To underline the fact, he is also a professional investor, one of the best in London. It is always good to see him, not only for a metaphorical hug, but also to chew the fat as far as the state of the market, the runners and riders, and what may happen next. It is also the case that when I meet him I think of whether I should just have been an investor, rather than say a PR / IR person, CEO, financial journalist? Leading on from this is the way that while all these things have been done in the past, could this be the time to be a professional investor / trader? After all, setting up and maintaining a business is hell, courtesy of Rachel Reeves and friends. One is also taxed to death when one wins, and from the testimony of another friend, there is being taxed in advance by HMRC too. Instead, the lure of investing / trading tax free with a spreadbet firm could be the way forward. And of course, even if you blow it, winning would have given away a fifth as a capital gain, or of course approaching half versus a salary.
The other point I was reminded of with my professional investor friend was the way that he is in the first lane as far as deals / placings and gossips is concerned. He is also treated like a god, as all the City types in the restaurant were keep to deliver grovelling greetings. For some reason, I do not get that so often. So perhaps being an investor / trader / mover / shaker is the way forward?
This Week’s Risers
One of the reasons that I was reminded this week of one of the possible wonders of being a private / professional investor was the ongoing rise and rise of Delta Gold (AQSE:DCG). While the buzz here was good even from the start of its journey on the stock market back in December, the give away from a charting perspective was in January when the shares were rising above a rising 50 day moving average around 15p. As it turned out, that was it. Well, apart from the revelation that Purebond, who had been invested in Guardian Metal (GMET), from very early days, were also investing in Delta Gold. Indeed, the examples of both Delta Gold and GMET are probably enough for most of us to wonder why we bother “working” and do not just trade / invest the markets.
Indeed, to this duo one can perhaps add in the biggest riser of the year to date which was Kendrick (KEN). While everyone and their mother are grandstanding the 31x rise for the shares since January, my awareness of the company and its prospects in the rare earth space was helped along by being given the chance to interview Chairman Colin Bird in January, and so to be made aware of the opportunity. I have then charted / called the shares all the way up. Speaking of being made aware of the opportunity, this week I was reminded that not only is Shuka (SKA) continuing to deliver on drilling at Kabwe, but the CEO Richard Lloyd is a geologist, and of course Oliver Friesen at GMET is a geologist. All these things help, don’t they?
Magic Formula?
Of course, it is easy to look back and say I would have bought this or that. Or as I think some commentators on X might do, say they have bought this or that. But I would say that after a rather long near 40 years of looking / working and writing about the markets, there are just “one of two” things that can be giveaways as far as the next multi-bagger stock. I would say just in terms of risers / momentum, a stock which remains up 30% on the week, 50% on the month and 100% on the year, is unlikely to be a flash in the pan. If you then add in a basic technical analysis filter such as a rising 50 day moving average, uptrend line in the RSI window, bear trap, gap reversal, and perhaps Bob will be your uncle.
I would say that the key here as far as the table above of stock risers this week is to look for the consistent movers, both on a weekly and monthly basis. Ideally, up more than 30% on the week and 50% over the past month will have the momentum to keep going. This would include from the above list First Class (FCM), Beowulf (BEM) after a great RNS this week, and Poolbeg (POLB). Forgent (FORG) may be just shy of 30% / 50%, but closed above its 50 day moving average last week. BSF (BSFA) looks to have done enough on the technicals too, as has a stock which I have called up from well below 100p – Panther Metals (PALM). Rather larger on the market cap scale, and called up from the lows has been Raspberry Pi (RPI), something which reminds me I really should be looking at the larger cap stocks too, especially given how illiquid and generally flaky the small caps can be.
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.
