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Small Cap Stocks Catching FOMO Bids

Why James 'Rev Shark' Deporre is adding to some of his favorite names.

With the stock market – and especially small cap stocks – trending upward, it’s time for traders to make some hard decisions.

“When the action has been as strong as it has been recently, it creates FOMO (fear of missing out) as well as very aggressive dip-buying," TheStreet’s James “Rev Shark” Deporre wrote recently on Real Money.  "If you have missed this move, the worry tends to be about missing out on more rather than buying too late.”

The good news, according to Rev Shark, is there are many stocks that are not as extended as the indexes, and most of them are small-caps that currently have the best technical action.

“The dilemma in this market right now is not whether to put more cash to work but to find good entry points,” he said. “It isn't easy, but I find that the best approach is to make small incremental buys and then look to add as things develop.”

A couple of names Deporre has added include Ammo, Inc.  POWW, Ondas Holdings  (ONDS) , and Beyond Air  (XAIR) - Get Free Report, all of which have earnings coming up in the next week or so.

“There is a temptation at times to sell some names that you have been holding for a while and that have finally started to show some life,” Deporre noted. “However, it’s very easy to sell too early in these situations since it is such a relief to finally see positive action. This is what creates overhead resistance in many cases.”

Get more trading strategies and investing insights from the contributors on Real Money.