The deep freeze has taken over small cap land. It has been a long time since small caps were out of vogue but the time has come. As the great rotation of capital shifts from high risk stocks to low risk, high dividend payers, many think the end has come for any investments in small caps. I am here to say that is not true. Over the past year, you could have closed your eyes and thrown a dart at a small cap and made a lot of money. Those times have changed, however there is still money to be made.
You must now start analyzing the charts and buy at the key levels. For example, on no news, Rosetta Genomics Ltd. (NASDAQ:ROSG) has fallen from over $6.50 to $3.45. This monster drop is now crossing the 200 moving average and heading to gap fill at $3.20. This $3.20 level will be where the stock price has been cut in half as well as major support. At this discount, the stock becomes extremely attractive to tuck away a small position.
Another biotech stock approaching a key level is OXiGENE Inc (NASDAQ:OXGN). Good news drove it to $5.40, however the risk adverse market has taken it down to $2.59. There is a key gap fill at $2.43 that offers a very intriguing risk to reward opportunity.
Always remember small cap stocks are very high risk. Most likely the way to trade these plays is to be in, get a solid bounce and take profits.