Market Overview

The Strongest Small-Caps in the Market


Traders who are comfortable with a high level of risk/reward frequently will gravitate to the small-cap space where big gains (and losses) in a short amount of time are commonplace. One of the strategies that momentum oriented small-cap traders utilize is relative strength, which is a measure of where a stock is now compared to where it has been in the past. One of the most commonly used relative strength indicators is the RSI - a high number means that a stock is strong while a low number means that it has been weak.

I ran a scan looking for the strongest stocks in the market over the last 14 trading sessions and turned up 6 names, all with market-caps below $2 billion. These stocks all have RSI readings which are above 70. Given the extreme strength of these stocks, they could be ripe for a pullback, but on a very near-term basis, these 6 stocks could continue to push higher.

In any event, these stocks' high RSI readings indicate that they could be volatile in the coming days. Hence, they may be providing opportunity for short-term traders who look to capitalize on volatile price movements. Below, Benzinga outlines these 6 stocks.

Arena Pharmaceuticals (NASDAQ: ARNA) - The strength in this name is due to recent FDA approval of Arena's weight loss drug lorcaserin. As a result of this favorable decision, ARNA shares have surged more than 171% over the last month. Year-to-date, the stock is up better than 215%. The approval of the company's weight loss drug is a major milestone as the FDA has not approved a weight-loss drug treatment in many years. On Monday, ARNA shares had added another 7% to $5.89. This stock could see more quick gains if it can get above $6.00 and hold that level. The 52-week high in ARNA is $7.01.

Demand Media (NYSE: DMD) - A bullish earnings report in the month of May has sent Demand Media shares on a tear. The stock's chart looks like it could be set for higher prices and shares have jumped better than 34% over the last month. Year-to-date, DMD has added 43%, but the stock is actually still down roughly 30% over the last year. At current levels, the company has a market-cap of $792 million. On Monday, DMD shares have added 3% to $9.47.

Logitech International (NASDAQ: LOGI) - This stock is surging again on Monday and was trading up better than 5% to $11.22 on heavy volume. The company develops and markets hardware and software products for digital navigation, music, video entertainment, gaming, social networking, and audio and video communication over the Internet. Over the last month, LOGI shares have added more than 42% and the chart continues to look promising. At current levels, the company has a market-cap of $1.94 billion.

Lifeway Foods (NASDAQ: LWAY) - This stock has been catalyzed by a strong earnings report earlier in May. The stock is now up more than 18% over the last month and is trading at $10.12. The 52-week high in the name is at $11.90. Year-to-date, shares have added a little less than 5% and over the last year the stock is down 0.70%. At current levels, LWAY is yielding 0.69%.

PRGX Global (NASDAQ: PRGX) - This stock has a very nice chart and has recently broken out of a consolidation range. Over the last month, shares have added more than 17%. Year-to-date, PRGX is up a little more than 24%. At current levels, the company has a market cap of $185 million. The next important level in the stock may be at its 52-week high which is $7.90. On Monday, PRGX has lost 0.14% and is trading at $7.38.

Repros Pharmaceuticals (NASDAQ: RPRX) - This company announced last week that it had held a meeting with the Division of Reproductive and Urologic Products to agree upon the registration requirements for the Company's Androxal oral therapy for the treatment of secondary hypogonadism. The news sent the stock skyrocketing and shares are starting out strong on Monday where the stock has traded up 5.27% to $7.79. RPRX has now gained more than 78% this month alone and is up around 61% in 2012. The small-cap name has a market cap of $115 million.

Posted-In: Long Ideas Short Ideas Small Cap Analysis Technicals Intraday Update Movers Trading Ideas Best of Benzinga


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