Why Small Stocks Mean Big Profit Potential

On any given trading day, it’s the big, well known stocks that grab the headlines. Be it news developments that drive stock prices or even the whole market for better or worse or just product news, big stocks get big attention.

But for this year’s stock market performances, bigger isn’t necessarily better for price gain opportunities. 

While the US stock market continues to gyrate up and down so far this year with plenty of big moves, it’s the small fry stocks that have turned in some of the better and bigger positive moves.

Take the moves from May 11 through yesterday’s close. Smaller stocks as tracked by the Russell 2000 Index have gained in price by over 11.7% compared to the bigger stocks as tracked by the Dow Jones Industrial Average and its much more meager gain of 4.2%.

Smaller stocks are less susceptible to global economic headwinds including currency swings and are capitalizing on more localized positive economic developments than big global stocks.

Even with the positive gains for smaller stocks, I’m seeing more opportunities shaping up for the Russell 2000 index. And specifically, the Russell 2000 index futures contract is revealing a buy zone opportunity that I am sharing with you today.

The Russell 2000 Index (RTY) Trade Setup

Here’s how the chart is showing the potential gain from the smaller stocks of the US market embedded in the Russell 2000 Index futures contract (RTY)…

  Russell 2000 Index Futures Contract (RTY) Price and Technical Analysis – Source: TradingView

And here’s how I see the potential for gains setting up for the index futures contract…

The Russell 2000 Index futures contract (RTY) one hour time frame is in an up trend.

The market just finished extending to form a high price and is showing evidence of a short term bear pull back towards the up trend line.

It will be a good idea to wait for a lower price near the up trend line before looking for long ideas.

Entry: Counter trend line break bullish in the buy zone.

Stop: 1,718.40

Limit: 1,930.20

As long as the market stays above the up trend line, it will be a good idea to turn to the

five minute time frame and to look for Tunnel Trader long / Destination Trader long ideas.

The Bottom Line


For more on the markets as well as trading education and trading ideas like this one, look for the next edition of Josh’s Daily Direction in your email inbox each and every trading day.

I’ll be bringing you more of my stock and futures contract trading tutorials as well as some additional trading ideas.

And these ideas also will include alternative assets such as digital currency trades via futures contracts for the likes of BTC and ETH. 

Below, look for a special presentation invite discussing these opportunities in the making right now.

And if you know someone who’d love to make this a part of their daily trading routine, send them over to joshsdailydirection.com to get signed up!

Keep on trading,

P.S. While smaller US stocks are showing potential gains, there are also alternative assets that I see proving trading opportunities. 

Digital currencies are also setting up profitable trades that could provide an alternative income source for traders armed with the right information. And this could even set up a nice side job (gig) for you in the process.
I continue to provide this information in my War Room research service, which you can learn more about here.

Josh Martinez

Josh Martinez

Josh Martinez is an elite Analyst who’s been actively trading the financial markets since 2011. He’s known as one the leading innovative traders in this industry due to his his cutting-edge strategies.

Josh first burst into the scene when he took an initial deposit investment of $500 and turned into over $39,000 in just under 2 years.
Josh’s trading articles have been featured in Your Trading Edge, The FX Street, Trader Planet, Forex Crunch, Trading Pub, and Equities.com.

In addition to trading, Joshua has also trained thousands of traders worldwide. His strategies and systems have helped others find success in the market

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