The Best Trades Happen Where Many Fear to Look

Almost a month ago, Trump made his big tariff announcement:

And the markets have not been happy…

But take a look at the S&P 500 since that day.

Slowly but surely, we’re making a comeback…

I’m excited! We’re in for another busy week and hopefully a further market recovery…

I talked all about that during my brand new Sunday evening live stream, Bohen’s Sunday Market Brief.

Make sure you join me next Sunday at 7 pm ET. 

I’m keeping it real, taking your questions, and getting you ready for the trading week ahead.

Don’t forget to tune in!

I’ve been saying the same thing over and over again since the beginning of April…

All the fear is overblown, and there’s no need to panic. 

And despite its bipolar behavior this month, I’ve continued to be bullish on the market.

As I discussed with my StocksToTrade Advisory members yesterday morning, the Russell 2000 had its biggest week since November…

By the way, if you’re interested in more mentoring, trading ideas, and more, StocksToTrade Advisory is perfect for you.

You’ll also get a monthly newsletter with my top picks, three weekly videos, bonus reports, and more. 

Sign up for StocksToTrade Advisory today!

And speaking of indices, the three most important to me are the S&P 500, the NASDAQ, and the Russell 2000.

Many people ask why I pay less attention to the Dow Jones Industrial Average (DJIA)…

It’s only 30 stocks, and the index is weighted by price, not by market value. That means that if one of the more expensive names has a bad day, it can disproportionately bring the whole index down. 

Case in point: UnitedHealth Group (NYSE: UNH) experienced a 22% drop on Thursday, the  17th. That cost the DJIA 805 points and marked the largest daily Dow decline caused by a single stock.

The Russell 2000 is an index of small cap stocks, one of the most popular, in fact.

These were our saving grace during a tumultuous period in the broad market. 

Instead of bonds, gold, or cash, small and micro-cap day trades were our hedge.

Those overlooked, under-followed names can be one of the best ways to stay aggressive, even when the S&P 500 is acting like a yo-yo.

Let’s talk about why…

Why Small Caps Can Move Opposite the Broader Market

First off, small and micro-cap stocks live in their own world.

• They’re not tied to the Dow Jones headlines.
  
  
• They’re not sensitive to every Fed meeting or global crisis.
  
  
• Many of them are driven by individual catalysts, like biotech approvals, new contracts, tech innovations, or simple hype cycles.

Basically, they don’t need the whole market to be green to rip higher. All they need is their own story and some attention.

This is exactly why, when the big indexes are getting hammered, as they have been this past month, you often see small caps light up. 

The small and micro-cap universe is where the smart money goes to find faster, more explosive opportunities.

And we’ve seen this in spades…

Tons of high-quality setups waiting for us each morning, and massive Oracle winners every day.

Oracle does much of the heavy lifting when it comes to managing a long list of day trading opportunities.   

Check it out for yourself during one of our free daily webinars. See why it’s the tool I couldn’t trade without.

How Small Caps Act as a Trading Hedge

In a rocky market, fear rules the day, and the average trader pulls money from the Apples and Amazons of the world.

When the big indexes are chopping or fading, small and micro caps often pop because:

• Liquidity dries up, so it takes less buying to move the stock.
  
  
• Traders seeking volatility flock to anything that moves 20%, 30%, or even 50% in a day.
  
  
• Low float stocks become prime real estate for parabolic moves.
  
  

That’s why having a small cap game plan, even just a couple of solid setups, can hedge your portfolio’s broad market exposure in ugly conditions.

You’re not hedging by sitting in cash…

You’re hedging by playing the right battlefield.

The Right Way to Approach Small-Cap Trading

Remember, small and micro-cap stocks can move fast…

They can double in a day… but they can also cut in half in an hour.

So you need a plan:

Stick to High Volume Movers:

If a small cap isn’t doing at least 1–2 million shares of volume, skip it. Liquidity is everything here. It helps protect you from being stuck in a bad trade you can’t get out of.

Look for News and Catalysts:

Stick to stocks moving on real news: contract wins, FDA approvals, acquisitions, major upgrades.

Use Tight Risk Management:

Set your stops tight and respect them.

This isn’t long-term investing. This is tactical trading. Get in, collect your gains, and get out.

Focus on Quality, High-Probability Setups:

These are what we’re always looking for…

Reliable, proven patterns like the dip-and-rip, RCT, morning fader, or afternoon VWAP holds. These setups give you structure and repeatable edges.

Know When to Step Aside:

If the setup’s not clean, if the volume’s weak, if the catalyst is junky, just walk away. There’s always another setup on the horizon.

Have the Right Tools:

At a minimum, you need a robust trading platform.

My top pick and the one I use every single day is StocksToTrade.

Filter for volume and float, analyze price charts, create your watchlist, add your technical indicators, and access all the data you need in real-time, all in one place.

It has everything you need to stay ahead of the game.

And right now, you can get two weeks of both the STT platform and our Breaking News Chat service for $17.

Grab your 14-day StocksToTrade + Breaking News Chat trial today for only $17.

 

My Final Thoughts…

You don’t need to abandon trading when the market’s ugly, and you don’t need to sit around praying the S&P stops tanking.

Instead, adapt.

Shift your focus to the pockets of strength — the small and micro-cap runners fueled by hype, catalysts, and momentum.

Trade tactically and trade with discipline. 

If you can master that, you’ll not only survive when the broad market gets rough… you’ll thrive.

Small caps aren’t just a side hustle…

They’re your haven when the broad market stumbles.

Have a great day, everyone. See you back here tomorrow. 

 

Tim Bohen

Lead Trainer, StocksToTrade