Semtech: #PowerStocks Series Pick Of The Week (January 2025)

Were you 1 of the 2 lucky winners of the Toto Reunion Draw? The prize money swelled from $10.8m to $13.3m, making this draw the largest ever in Singapore. Who doesn't want to get rich with minimal effort? Needless to say, snaking queues formed all over Singapore. Because I didn't win, it's back to analyzing the stock market. OK, I'm joking. Regardless of the outcome, I'll be analyzing the stock market. Before I reveal my plan for this week's stock pick, shall we review last week's #PowerStocks pick: Flowserve (FLS)?

Review Of Last Week's Pick Of The Week

Flowserve (FLS) was last week's stock pick. The company manufactures and sells aftermarket flow control systems, with its customers from various industries. After sharing my trade idea, its share price rose for a few more days. Then, the anticipated pullback began. Do you remember the price area I'm watching to buy its shares for an explosive swing trade? It remains unchanged. I hope that my trade plan for Flowserve (FLS) will play out by the end of this week. I know and understand that the allure of high returns without effort is highly attractive. It breaks my heart when I hear of people falling for impersonation scams.

To protect you from scams, please note that my team and I WILL NEVER solicit for any investment. 

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Why Is Swing Trading Semtech (SMTC) Worth It?

Source: semtech.com

Semtech manufactures and sells semiconductors targeted at the high-end consumer, enterprise, communications, and industrial segments. This little-known semiconductor stock has enjoyed a strong start of the year, rising 18% in 3 weeks! Here's something more fascinating. While Nvidia's shares have staged a magnificent rally over the years, Semtech's shares have been beating Nvidia's in recent months! Naturally, the performance of Semtech's shares has beaten the S&P 500 as well. In the past 3 months, Semtech's shares have outperformed the S&P 500 by over 12x! As its share price pulls back, which price area am I waiting for to buy them for an explosive swing trade? Continue reading to get the details. P.S. What if I told you that you could drastically gain control over your emotions of fear and greed, and master the stock market in a short amount of time? My team and I have worked tirelessly to help you achieve results fast. Click on the banner below to claim your stock course for free (limited time) now!

Performance Of US Stock Market vs Semtech (SMTC)

Can you tell the price trend of Semtech's shares from the chart above? It's in a mighty uptrend. Because I can increase my chances of profitability by following its price trend, I'll be looking for an opportunity to buy its shares for an explosive swing trade. There's something else that I can infer from the chart above. The relative performance of Semtech's shares against the US stock market (represented by the S&P 500). It's crystal clear that Semtech's share performance has crushed that of the S&P 500. While the S&P 500 had risen by 5% in the past 3 months, the share price of Semtech had risen by a staggering 60.5%! That's a jaw-dropping 12x outperformance! The shares of Semtech are extraordinary, and I'm keen to analyze them further.

How Explosive Is Semtech (SMTC)?

The next step of analysis involves finding out the number of times the shares of Semtech have exploded upwards in price. In 11 months, its shares have shot upwards 20 times! Are you ready to find out the magnitude of its explosive up moves? The smallest measures 6.4%, while the largest measures 60.6%! Here's another interesting fact - Semtech's shares have exploded upwards in price by 60% twice! And it's no small company. Semtech enjoys a market capitalization of over $6b, an important factor in reducing the likelihood of its shares being manipulated. This adds to the security of trading its shares. Here comes the next important question - is it time to buy its shares for an explosive swing trade?

Key Price Levels

By uncovering its key price level, we can determine whether now is the perfect moment to buy its shares for an exciting swing trade. This key price level, also known as support and resistance, is where Semtech's shares will likely bounce off. I've identified a support area around $72.50. Although the share price of Semtech is near $72.50, I think that it could pull back a little deeper before rising. With that scenario in mind, I'm keeping a close eye on $72.50 before buying its shares for an explosive swing trade. Here's a pro tip: Instead of staring at your screen, you may want to set a price alert on your broker's platform to be notified so that you can spend precious time with your loved ones.

Which Instrument Should You Consider Using?

  Do you ever wonder about the instrument used to trade explosive stocks? With 3 main trading instruments available - stocks, contract-for-difference (CFD), and options, you wonder which suits you best. Since stocks (as an instrument) is easy to understand, I shall focus on CFD and options. Here are the main similarities and differences: CFD works like a mirror to stocks. When a stock rises $1, its CFD rises $1. However, due to its unique pricing mechanism, your options price doesn't rise by the same amount. In fact, depending on the market conditions, the price of your options contract may even drop! Your CFD broker will charge you a finance fee for lending you money for your trade. However, no lending is required for options, so there is no finance charge. Because there's a finance charge by your CFD broker, CFD is not the ideal instrument for mid to long-term trades. On the other hand, options allow you to implement different strategies across time horizons. Both CFDs and options are leveraged instruments because they allow you to control a larger market position with a smaller amount of capital. While CFDs do not have an expiration date, options traders must pay attention to the expiration date of their options contracts. You must be thinking, "What's the beauty of trading options?" Options are like smartphones. You can choose to use a smartphone for its basic or advanced functions.

And options don't have to be all about Math and dry!

It can be made easy to understand through real-life analogies.

In the same way, you can implement basic and/or highly advanced strategies depending on your level of comfort. Options allow you to be versatile in adapting to the shifting market conditions and capturing opportunities in the process. Are you a CFD or options trader? I'm glad to be fluent in both. Finally, this is for educational purposes. Please perform your due diligence. All images are taken from pexels.com, pixabay.com, sectorspdrs.com, tradingview.com, and unsplash.com, unless otherwise mentioned.

Claim Your Free (Limited Time) Stock Course Right Now:

The stock market is full of traps laid out by professional traders. Many new traders are often left confused by conflicting signs and signals. Worse still, ~80% of traders lose money. This is because trading isn't just about skill alone. It includes the mastery of your emotions. But what if I told you that you could quickly gain control over your emotions of fear and greed and master the stock market? My team and I have worked tirelessly to help you achieve results fast. Click on the banner below to claim your stock course for free (limited time) now!