My Formula for Finding Small-Cap Breakouts  | | Robert Ross
Speculative Assets Specialist | In the last year, we closed eight Breakout Fortunes positions for gains of 100% or more. How did we do it? It all stems from my unique market approach, which I'm going to share with you today. You see, every investor has their own "secret sauce." Some take a page from Benjamin Graham and value invest. Others are purely technical analysts. I like to have my cake and eat it too. That's why I use both fundamental and technical analysis. But then, I take it a step further and sprinkle in sentiment analysis on top. This framework has worked out pretty darn well. And soon, you'll be able to look at markets the same way. | SPONSORED | | Trump Announces Stunning Manhattan Project This secret document contains stunning details about Donald Trump's big Day 1 announcement... His allies are calling it Trump's Secret Manhattan Project. Because if what's in this leaked document is even half true (and trust me, it comes from a very, very credible source)... It will be the boldest, most mind-blowing and daring American initiative ANY U.S. President has launched in over 80 years. And over the next 100 days, it could set off a huge dose of "Trump Market Euphoria"... igniting a buying frenzy in very specific AI stocks... unlike anything we've seen so far. Click here and see for yourself. | | | Watching for "The Breakout" If there is one trait I would put above all others, it would have to be the "breakout." Breakouts tell you when a stock transitions from unprofitable to profitable. And it's often the inflection point where we see massive price movements. Think of stocks like Palantir (PLTR) or Robinhood (HOOD) in 2024. These companies made it through the tough early years of scaling for growth while typically burning through cash. Now they're profitable. When that shift happens, you typically see the stock violently move higher as the market rewards the newfound stability and growth potential. 
View larger image Identifying "The Breakout" To find these breakouts, I look for companies with high gross margins and accelerating sales growth. A company that shows improving profitability and revenue expansion is a prime candidate for significant upside. However, I don't want to be late to the party. So, I focus on companies on the cusp of turning the corner. That's why small cap stocks are so attractive. They are more likely to break out because of their smaller scale and market positions. Of course, not every small cap will make it to this stage. But those that do can provide substantial returns. Keeping an Eye on the Primary Trend Once I've identified a potential breakout, the next step is to track the stock's primary trend. I only buy stocks in Stage 2 uptrends (see the graphic below). 
View larger image In other words, I look for stocks with a rising 200-day moving average (MA). This is a critical indicator for me because a rising MA suggests that the stock has long-term momentum and that the trend is strong. The key here is that I don't want to chase stocks that are stagnating or in a downtrend. The market has already given its verdict on those. I prefer to buy stocks when they're on the upswing. Along with the price trend, I look for a heavy uptick in volume to confirm my idea. Higher-than-usual volume suggests investors are noticing the stock's potential. This confirms the broad market interest, which is key to sustaining that momentum. A high-volume breakout is often the beginning of a larger, longer-term trend. Finding the Right "Narrative" The final piece to my small-cap strategy is narratives. These are the stories that will drive market behavior over the next six months. A great example is my Rigetti Computing (RGTI) recommendation from the 2024 Investment U Conference, which rose over 1,000%. 
View larger image Back then, I predicted that there would be a renewed interest in quantum computing as the next frontier in tech innovation. This was an area that many investors had overlooked. But I knew that the market would eventually catch on. Sure enough, quantum computing became a hot topic, and Rigetti's stock skyrocketed. 
View larger image Predicting these narratives takes a lot of research and foresight. I pay attention to emerging trends in technology, regulation, consumer behavior, and geopolitics. These forces often dictate the market's direction. If you can identify which trends will catch fire before they do, you'll be in a great position to benefit. So, why do I like small caps? Larger companies are often slow to change direction. Small cap stocks can pivot quickly and capture the early stages of a new trend. Bringing it All Together My investment approach boils down to three concepts: - Fundamental analysis
- Technical indicators
- Understanding the broader narrative.
This framework helps me identify high-growth opportunities. And with small caps, you have the chance to be early on the next big thing. However, as with any investment strategy, it's important to remain disciplined and stick to your approach. Markets can be volatile, especially in the small-cap space. Patience and careful analysis are the keys to success. By following this methodology, you'll be well-equipped to find and ride the trends that can lead to substantial gains in your portfolio. Stay safe out there, Robert Want more content like this? | | | | | | 
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