Russell Rallies 6.5%

Last week was simply beautiful for small-cap investors as most small-cap stocks burst higher. The Russell 2000 small-cap index rose 6.5% on the week, trouncing all other major indices. The Dow was the laggard, although the 1.3% gain for blue chips was still pretty good. The Standard and Poor 500 rose 2.1% on the week, and the NASDAQ added 2.5%. 

But what a performance by small-cap stocks! The Russell closed the week at 666 after breaking through 660-level resistance around 10:30 Friday morning. The close above this level, and the fact that the index rose throughout the entire day, is certainly bullish. I've been saying for weeks that if we see the Russell break through 620 and then 660, I'm targeting a move to 725. I think we might see this in the next few weeks, pending any major economic disruptions on a global scale.  

Take a look at this 5-year chart of the Russell and you'll see what I mean from a technical perspective. The precipitous drop that occurred in late 2008 when the index fell from 750 to 350 was the result of panic selling as investors became convinced another great depression was unavoidable. Valuations went out the window, and stocks plunged. The index is now approaching the trading range that began in January of 2008, when investors had priced in slowing growth but not a global economic catastrophe.    

We're now emerging from a dreadful recession, and encouraging data has investors feeling that spring might bring more than just blooming foliage. With earnings from many companies coming in rosier than many thought possible, projections for growth are showing that many stocks are still undervalued.

Last week's rally was capped off by positive employment data.  The consensus estimate was for 68,000 non-farm job losses and an unemployment rate of 9.8% during February. Results showed a loss of 36,000 non-farm job losses and an unchanged 9.7% unemployment rate. Both results are better than expected. What's more, China's Premier Wen Jaibao came out with a statement that Beijing will continue to control inflation despite stimulus spending. He said that his spending should help the country hit its 8% growth target on the year. The announcement helped China stocks move higher and upcoming conferences next week should help maintain interest in high-growth China small-cap stocks.   

***Both developments sent stocks sharply higher, and the Small Cap Investor PRO portfolio was no exception as all but two of our stocks rose during the last week. The best performance came from two of our China stocks, both of which rose over 16%! 

We also just added a new company to the portfolio, and the stock is already moving higher. You can find out more about all 15 of our high growth portfolio stocks for half off our regular subscription price for one more day! Just click this link and you'll be directed to our website where you can take advantage of this amazing offer.  

So what is the story with our latest stock recommendation? Well, in Saudi Arabia, they have a National ID Card that is tamper-proof and virtually impossible to counterfeit. The smart-card carries biometric information on the holder, including fingerprints and demographic information.   

India has 4 million Vehicle Registration smart-cards in use. With one swipe, transportation officials can verify that registration fees and insurance are current, and even get information about the vehicle itself.   

Italy now uses smart cards for Citizen, Foreign Resident, and National Police identification. In France, all of your medical records can be contained on ID smart-cards.   

The technology is also in the U.S. where the Department of Homeland Security and the military are using smart cards for identification purposes. Small Cap Investor PRO readers are now buying a leading Smart Card company that's got a forward P/E of 9, and a PEG ratio of 0.4. The company does $59 million in annual revenue and has $3.45 per share in cash.   

With those shares trading for just $6.40, it's extremely undervalued. But that's not going to last. With big earnings growth expected this year as more government's transition to smart ID cards this stock has tremendous upside potential.   

And through the end of today, you can get all the details on this stock, PLUS a one-year subscription to Small Cap Investor PRO, for just $99. Click here to get 50% off the annual subscription price of the market-beating Small Cap Investor PRO advisory service and get the details on the dynamic smart-card company we're buying now. 

I hope many of you have been able to sign up to Small Cap Investor PRO and pick up shares on my recommendations over the last couple of weeks. If you did let me know, I'd love to hear your success stories. My address is: editorial@smallcapinvestor.com.