Make Money on the Roller Coaster


Tyler Laundon Image Tyler Laundon Editor, Cabot Small-Cap Confidential

It continues to be a market that runs up then sells off, runs up and sells off, but instead of bemoaning the action, take advantage of it advises Tyler Laundon of Daily Profit.

It's a vicious cycle.

Stocks quietly rise, rally to a peak and crash...only to do it all over again.

We're in the painful part of that cycle right now, as stocks seek a bottom. The small end of the market-small- and micro-cap stocks-is taking it on the chin the hardest.

But the bottom of this cycle is also the time when we can get lined up for the biggest returns with these little companies, as much as 10% to 30%.or just a few weeks.

We don't need to go out and buy everything all at once today. But it's sure a good time to make a shopping list so we're ready when the right time comes.

And that time could be sooner than many investors think. Check out this five-year chart of the Russell 2000 Small Cap Index to see exactly what I mean.

Click to Enlarge

In October, small caps broke below their 50-day (blue line) and 200-day (red line) moving averages, sending the index back down toward a critical support zone around 750.