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By Scott Rubin

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 six names, all with market caps below $2 billion. These stocks all have RSI readings that are above 70. Given the extreme strength of these names, they could be ripe for a pullback. But on a very near-term basis, these six 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 are looking to capitalize on volatile price movements. The six stocks are as follows:

Arena Pharmaceuticals (NASDAQ:ARNA): The strength in this name is due to the recent FDA panel approval of Arena's weight loss drug lorcaserin. An FDA advisory committee voted 18-4 in favor of recommending that the FDA approve the drug. The FDA will make a final decision on lorcaserin by June 27. The agency frequently follows advisory panel recommendations, but it is not required to. As a result of this favorable decision, Arena shares have surged more than 171% over the last month. Year to date, the stock is up more than 230%. 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, shares 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 is $7.02.

Demand Media (NYSE:DMD): A bullish earnings report in May has sent Demand Media shares on a tear. The stock chart looks as if it could be set for higher prices, and shares have jumped better than 34% over the last month. Year to date, Demand Media 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, shares added 3% to $9.47.

Logitech International (NASDAQ:LOGI): This stock was 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, 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. Shares are now up more than 18% over the last month and are 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 4%, and over the last year the stock is down 0.70%.

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 Global is up a little more than 21%. The next important level in the stock may be at its 52-week high, which is $7.90. On Monday, shares had lost 0.14%. PRGX is currently trading at $7.22.

Repros Pharmaceuticals (NASDAQ:RPRX): The company announced last week that it had held a meeting with the Division of Reproductive and Urologic Products to agree on the registration requirements for the Repros' Androxal oral therapy for the treatment of secondary hypogonadism. The news sent the stock skyrocketing and shares started out strong on Monday, as the stock was traded up 5.27% to $7.79. Repros has now gained more than 78% this month alone and is up around 61% in 2012. The stock is currently trading at $7.57.

Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Source: The Strongest Small Caps In The Market