Those of you who bought when many others were selling this past fall deserve a big pat on the back.

The small and micro cap stock rally in early 2012 has caught a lot of people off guard.

Here were the three small-cap stocks that made the biggest gains on Thursday.

While I believe we are headed higher over the next three weeks, the bears have a funny way of changing the tide of the market without any detection.

Follow these three keys when executing this small cap fund strategy to successfully nab quick profits through your next small cap trades.

Another big day in the market meant huge gains for a number of small-cap stocks. Here are the five small caps that made the biggest moves.

On a day when the Dow Jones Industrial Average rose 2.52 percent, three small-cap stocks made substantial gains.

It's a stock picker's market, which means you shouldn't just buy an index or a broad based mutual fund right now and hope for the best. 

With the global debt crisis worsening, European prime ministers seemingly dropping like flies, and unemployment still hovering around 9 percent here in the U.S., the market has rarely been more volatile.

It’s enough to send investors ducking for cover – or at least seeking a safer haven. Dividend stocks are a good place to start.

If only those pesky, risky, growth companies (aka small caps) would get some investor attention, this market could really soar.

As an options trader I am often asked about my favorite options strategy for producing income. And recently, after working with Ian Wyatt on an issue for SmallCap Investor Daily, "What You Need to Know Before Using Options on Small Cap Stocks," I have been bombarded with questions from small cap investors about how to trade small cap stocks for income using options.

In my opinion, the best way to bring in income from options on a regular basis is by selling vertical spreads, otherwise known as credit spreads. 

Read any basic investment book and it will tell you that small-cap stocks are riskier than large-cap stocks. On an individual basis, that may be true.

However, if you do your homework and dig deep into the financials of small-cap stocks, you can reduce risk and increase reward dramatically.

For the record, small cap analyst Tyler Laundon points out that small caps tend to outperform large caps over the long-term. He believes that many investors mistake small cap 'risk' for what is actually short-term price volatility...

The stock market has remained in a holding pattern all week, as traders wait to see what kind of a compromise Congress and the White House can reach over federal spending as the August 2nd deadline looms large.

While the major small cap stock indexes don't show it, there were plenty of big moves Thursday as investors found positive signs spread among the ruins. Three of the top five performers all hit 52-week highs, and a management change helped the day's top small cap stock, Universal Forest Products, post a healthy 21 percent increase despite a 69 percent profit drop in the second quarter.

The Russell 2000 Index lost 1.63 percent in value and the Standard & Poor's Small Cap 600 dropped a similar 1.64 percent. While the Nasdaq Stock Market dropped 1.22 percent, two other major U.S. stock indexes held their ground a little better - the Dow Jones Industrial Average closed 0.44 percent lower, and the Standard & Poor's 500 was off 0.67 percent.

Small cap stock indexes were stuck in the same rut that gripped the large caps on Thursday: The release of a flood of the U.S. Strategic Petroleum Reserves that crashed the crude price, a weak outlook from the Fed, wars, unemployment and countless other woes.

Still, the Russell 2000 Index was off just 0.74 percent, with the S&P Small Cap 600 Index was down 0.85 percent. Both were performing slightly better than the Dow Jones Industrial Average and the S&P 500 Index.

Today's Top Performing Small Cap Stocks (Data provided by Yahoo Finance)

Ticker	Company Name	Today's Price	%Change
AMEX: EPM	Evolution Petroleum	$7.09	8.9%
Nasdaq: LLEN	L&L Energy	$5.08	8.3%
NYSE: SKY	Skyline Corp.	$15.45	7.8%
Nasdaq: CVCO	Cavco Industries	$41.36	4.8%
AMEX: QPSA	Quepasa	$6.41	4.7%

Evolution Petroleum (AMEX: EPM): The explorer that goes after oil left in inactive wells got a mention in a Forbes article about "good times ahead under rocks," which helped get it off to a strong start.

L&L Energy (Nasdaq: LLEN): The stock of this U.S.-headquartered miner with operations in China's Yunnan and Guizhou provinces is down 52 percent year-to-date, but could be rising on an earlier announcement of that nation's coal plans.

Skyline Corp. (NYSE: SKY): This maker of manufactured housing and recreational vehicles could see more demand for its products because of all the natural disasters that have struck the U.S. this year. Shares peaked in December at twice the current price. It does pay a dividend, with the June 30 payout yielding 4.3 percent.

Cavco Industries (Nasdaq: CVCO): Shares of another maker of manufactured homes also was on the rise, and is up 13.4 percent in the past 12 months.

Quepasa (AMEX: QPSA): The operator of a social site for young Hispanics is joining the Russell 3000 on Friday.

The secret to investing is simple - figure out the "real" value of a company and then attempt to pay a lot less. Unfortunately, for most investors it's extremely difficult to figure out the value of a company. So most of us leave it up to the professionals to make the decisions for us - and most professional money managers, particularly mutual fund managers, have just as difficult a time trying to beat the market. According to the Standard and Poor's rating agency, "over 90 percent of all mutual funds fail to keep pace the major market benchmarks over the long haul."

Small cap stocks have more than come into their own in the three plus decades since the legendary small cap guru Chuck Royce revealed his potential to the world of the investing. According to Royce, today there are more than 3,100 U.S. companies identified as micro-cap with market values of up to $500 million; more than 1,100 small-cap with market values between $500 million and $2.5 billion.

Small cap stocks have more than come into their own in the three plus decades since the legendary small cap guru Chuck Royce revealed their potential to the world of the investing. According to

Today there are all sorts of technologies to keep men and women in the military from getting shot. These brave people, many of whom are fighting in Iraq and Afghanistan, deserve the latest and greatest technologies to help keep them out of harm's way. And companies that are developing the best solutions are finding huge demand for their products.

Wow, small cap stocks just can't seem to get out of their own way, stretching the Russell 2000's losing streak to 6 straight days and potentially 6 straight weeks.

Over the past couple of weeks the stock market has appeared to be on increasingly shaky ground. The economic data coming in has been quite disappointing, suggesting that U.S. GDP growth in the current quarter will likely come in at less than 2 percent. Factor out productivity gains and that puts us at essentially zero growth here in the U.S.

Today, I would like to introduce to you a valuable indicator that comes from the options world and what it is telling us about the future for small cap stocks.

More than likely, you've heard its name on CNBC, Bloomberg or read about it in the Wall Street Journal or Financial Times. The indicator is the well-known and popular VIX.

I keep hearing about copper's potential "death cross" and the negative impact the cross would have on the market.

Really? Does copper truly have the predictive power that Wall Street analysts' are hyping? Or is the "death cross" in copper just another useless indicator much like the Hindenburg Omen?

The fear around nuclear energy is palpable.

 

The catastrophic events in Japan on March 11 have put a damper on the momentum of what was fast becoming a nuclear renaissance. For the past several years, nuclear proponents promoted nuclear energy as a clean, efficient, reliable and safe alternative to dirty fossil fuels - and the world agreed.

Famous contrarian Dr. Marc Faber, author of the Gloom, Boom and Doom Report, recently sat down with Bloomberg news to give his current views on the global economy.

Did you know that Krispy Kreme Doughnuts (NYSE: KKD) just reported its first profitable year since 2004? Do you care? Well, you should.

A number of years ago, the Winston-Salem based doughnut maker went from growth darling to near oblivion. But, after a few major changes the company seems to be moving in the right direction and could once again gain the adoration of investors.

I’ve heard many people on Wall Street state that silver IS the market right now.

The metal entered the year around $30 an ounce having climbed sharply in 2010. The surge in silver prices continued through the first four months of the year, only to fall off a cliff after the first trading day of May.

If you asked my wife or my employees what kind of investor I am, they'd probably tell you that I'm a growth-oriented value investor.

I made my bones as an analyst over the past 12 years by focusing on small-cap companies for that very reason; I enjoy doing in-depth research of undiscovered, small companies with the potential for significant capital gains.

I rarely, if ever, discuss options in the Small Cap Investor Daily.

However, the number of questions from readers has recently picked up regarding this fast growing investment approach. And I have research analyst Andy Crowder on our team - he has over a decade of experience trading options and publishing his strategies for a select group of subscribers.

 

So I've decided to set some time aside to discuss options and how to use them appropriately with small cap stocks. Hopefully this will help you begin to understand that options offer endless possibilities to increase your returns in an up, down or range-bound market.

Yesterday in "Google, But for Finding Great Stocks", I discussed the value of stock screeners as a powerful tool to find potentially great stocks.

I went through an example using one of the best free stock screeners on the internet FINViz.com and came up with two potentially great small cap stocks; MIND C.T.I. (Nasdaq:MNDO) and Commtouch Software (Nasdaq: CTCH).

It has been quite a story with silver prices lately. The metal entered the year around $30 an ounce having climbed sharply in 2010. After a brief pause in January, it resumed its upward trajectory - then really started to take off following the Fukushima nuclear disaster.

Editor's note: My wife and I just had our first child- an 8 lb 13 oz baby boy named Beckett Stephen McElroy. I'm taking some time off to spend some time with my wife and Beckett. Today, I've asked my boss, Ian Wyatt, to step in and write this issue of the Resource Prospector. Ian has some exciting news about his favorite stock holding... a small cap silver company. -Kevin

Right now, about 58 million Americans suffer from the most common form of skin pre-cancer - Actinic Kerotosis (AK). I say pre-cancer because with the right treatment, this relatively common skin condition can be prevented.

But, if not treated properly there is a possibility that the condition could get a lot worse - it could even become life threatening.

It is not my place to give you advice on which medical treatments you should choose for particular illnesses and conditions - I am not a doctor. However, I do specialize in finding opportunities to invest in small cap growth companies that have the opportunity to make significant returns.

There are only three letters that investors need to know to be able to find stocks that have the potential for big gains.

Those letters are P, E, and G. Combine these and you get PEG, an acronym for the most simple and powerful stock analysis metric for identifying growth stocks today.

When it comes to finding crude oil, the saying that it's just as good to be lucky as good often proves true. The latest technology and most experienced exploration team will get close to the oil, but to put a drill directly into an oil elephant requires a lot of good fortune as well.

Lately, one company has been both lucky and good. And the stock is performing exceptionally well in these days of $100 a barrel oil.

Last week, my esteemed colleague Tyler Laundon asked the question, “Is a Correction Coming?”

In his eloquently written article he briefly pondered the question, “…will the big money sell in May?" Obviously, he was alluding to the old Wall Street adage that always surfaces this time of year, 'sell in May and go away', or what some on Wall Street call the summer doldrums.

Immediately following Japan’s natural catastrophe and subsequent nuclear disaster, I wrote an article titled, “Is Now the Time to Buy Uranium Miners?”

Shortly after publishing yesterday’s article “A Note to All Chinese CEOs”, I received a message of concern from a reader.

I won’t use this person’s name, but she expressed concern that I unfairly lumped her stock holding L&L Energy (Nasdaq: LLEN) in with Puda Coal (NYSE: PUDA) and other Chinese small caps accused of defrauding shareholders.

As I told this person yesterday, my intent in including LLEN with these other Chinese small caps wasn’t to defame it. To the contrary, from my perspective, LLEN seems to have all the right stuff: good properties, good coal reserves, solid customer bases, and as far as I can tell, competent leadership. In full disclosure, I’m neither long nor short LLEN, and we don’t plan on buying or selling LLEN in any of the Wyatt Research portfolios in the immediate future, to the best of my knowledge.

As you may know I’m also hugely bullish on coal, and since the Chinese now consume more coal than any other country, it’s a no-brainer to look for growth and value in the sector.

Unfortunately though, for this reader specifically as an LLEN shareholder and for Chinese small cap and large cap investors, no matter how great your company is, or how honest the leadership, how cheap on an earnings basis or how promising the story – you must understand that your Chinese shareholdings will likely suffer a similar fate as the other companies, for the simple reason that there seems to be an epidemic of fraud and uncertainty in the sector.

Ten years ago India had a population of 1.015 billion, and only 5 million internet users. Today it is the second most populous country in the world with 1.17 billion people, and 81 million citizens use the internet.

The rationale for investing in Israeli tech stocks is simple - it is the most innovative high-tech nation in the world.

Japan's nuclear disaster probably set back the world's push toward nuclear-powered electric generation by years. Instead of huge nuclear energy expansion, which had been planned, we're likely going to see more nations stick with tried-and-true coal-fired electric plants, along with further expansion into natural gas.

 

The small cap Russell raced higher last month to end what was the best first quarter in years. During that time several stocks have hit 52-week highs particularly over the past few weeks.

Small caps pushed higher gain today and here are the top three small cap stocks that benefitted from the rise.

There is no shortage of media coverage on gold. But there is a shortage of fresh perspective on gold's strength relative to various currencies. I would say the same thing for silver.

I ran a quick screen on the 5 best performing small cap BRIC stocks YTD. It is no surprise to find that tech stocks dominate the list. I think you will find a few gems that have the potential to be quite prosperous. I will actually delve further into a couple of these stocks next week. Check it out!

Most people will tell you that America is still the world's best technology innovator.