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TheStreet Open House

Here's the Next Small-Cap Stock the Spec Money Will Chase

 DELAFIELD, Wis. (Stockpickr) -- Speculative money has returned to the markets with a vengeance in the small-cap arena, and it's hitting the tape across a number of sectors.

>>4 Stocks Under $10 in Breakout Territory

Just take a look at the performance of intellectual property player Spherix (SPEX) on Tuesday. This stock exploded higher by 96% with massive upside volume after the U.S. Senate and Senate Judiciary Committee Chairman Patrick Leahy removed a patent reform bill from the committee's calendar due to lack of bipartisan support. Traders bought shares of SPEX with no hesitation, pushing the stock above a number of key overhead resistance levels at $1.86 to $1.99 a share with heavy upside volume flows. Volume on Tuesday registered 45.16 million shares, which is well above its three-month average action of 1.46 million shares.

Another small-cap stock that exploded higher on Tuesday was biotechnology player Prana Biotechnology (PRAN), which ripped to the upside by 21% with strong upside volume flows. This stock has been a favorite target of the short-sellers, with shares down a whopping 72% coming into that sharp spike higher yesterday. Shares of PRAN broke out on Tuesday above some key near-term overhead resistance levels at $1.72 to $1.75 a share with strong upside volume. Volume registered 5.86 million shares, which easily exceeded its three-month average volume of 1.96 million shares.

Another small-cap stock that has seen spec money push its shares sharply higher in recent trading sessions is India Globalization Capital (IGC), which has exploded to the upside over the last month by 111%. This materials and infrastructure company in India and China has ripped to the upside from its May low of 63 cents per share to its recent 52-week high of $2.34 a share with strong upside volume flows. Most of that move was driven by the company's recent announcement that it will focus on the growing medical marijuana industry as an area of acquisition interest.

>>Must-See Charts: 5 Large-Cap Trades for All-Time Highs

If you're a small-cap speculative trader like I am, then the of action in these three stocks is exactly what you want to see. Spec money is flowing back into small-cap stocks, and the volume levels are very healthy. This spec money is hitting a number of sectors, but what I especially like to see is the money coming into the small-cap biotech stocks. That sector has been beaten down big in 2014, so it's nice to see that traders aren't afraid to take on size in that space once some of these names start moving.

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