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Fade the Breakdown in Small Caps With These 2 Stocks

by | Aug 20, 2021

If you follow these things closely like I do, then you already know that small-cap stocks outperformed the broader market the first few months of this year. 

But lately, they’ve been stagnant…

In fact, the iShares Russell 2000 ETF (NYSEArca: IWM), an ETF that tracks the Russell 2000, traded below its 200-day moving average Thursday morning — which tells me that smaller stocks are struggling. 

So in other words, I’m on the lookout for a pullback in the strongest small-cap stocks…

The Strongest Small-Cap Stocks to Trade Right Now 

But before I begin, you should know that the strongest small-cap stocks tend to outperform large caps by an extremely wide margin. 

I mean, sometimes it’s as high as six to seven times within a six-month period. So you’ll want to make sure you keep an eye on these names. 

In other words, smaller stocks have a strong chance of outperforming larger ones. And stocks that outperform the smaller cap index typically rally even stronger when the market becomes bullish. 

So instead of looking at all the stocks breaking down right now, I’m looking for pullbacks in small caps. 

I also have my eye out for stocks showing short-term pullbacks while the main trend remains intact. In a nutshell, I’m trying to find high-probability pullacks against the main trend. 

Check out my short video below because I’ve found some strong small-cap stocks that fit my criteria. These stocks will not only continue to buck the trend, but also outperform the Russell 2000 and S&P 500 over the near term. 

If you want to trade the strongest small-cap stocks, these two are it. I’ve talked about the first name before, and it’s gone up about 20% since the last time I mentioned it. 

Don’t forget to subscribe to our YouTube channel if you haven’t already so you can be notified as soon as we post our next video! 

WRITTEN BY<br>Roger Scott

Roger Scott

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