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:
- 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
Demand Media (NYSE:
- 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:
- 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:
- 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:
- 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
Repros Pharmaceuticals (NASDAQ:
- 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
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.