I don't know if the prior four days are a glimpse of what's really going on for the market, or if it's just the temporary result of yet-another-scare that will be forgotten by this time next week. (I'm leaning towards the latter, but not ruling out the former.) Either way though, after the damage that May doled out followed by the nastiness revived over the last four days, the question now isn't one of value, but one of confidence - did this last pullback send potential buyers packing for the summer? Frankly, I fear it did.  A reason for you to do the same? No, not as long as you're truly an opportunity-seeker, as oposed to just looking to "play it safe" with a clone of GE, P&G, or any other conglomerate that may as well be a mutual fund.  If you're serious about getting more out of the market, please keep reading - we've got some data and observations that will help guide you through the rest of the year. If you pick stocks solely because you like and use the company's products every day.... well, you may want to go ahead and skip to the community highlights section, where Fuel Systems Solutions (FSYS), Hudson Highland Group (HHGP), and MannKind Corporation (MNKD) are in focus.    Reckless Buying Leads to Reckless Selling We love small caps, but we love them for the right reason.... not just because they're undiscovered, but also because they're generally off the radar. Specifically, they're far enough off the radar to not likely be sucked into the bearish black hole that so many large caps seem to be headed towards at this point.  What's the difference? A pullback is a pullback, right? Well, yes, but not all stocks behave the same in a pullback, because not all stocks have the same kind of owner.  Let's call it like it is - most amateur DIY investors (which probably the bulk of investors, who should stick with funds, but don't) plowed into large caps throughout 2009, chasing performance without ever truly knowing what they were buying, or why they were buying it. It was a pure emotional response.... greed, in this case.  As is always the case though, an emotional action is eventually countered with an opposite and equally-emotional action; 2009's greed-buying has set up 2010's fear-selling.  Oh, that's not to say it's completely unjustified concern - 'Greece', 'austerity', 'BP', 'yuan', and a dozen other words will prompt an unsolicited explanation of everything that's clearly wrong with the market, which in turn is the reason investors are selling their stocks (large and small, but mostly large). Of course, what these investors don't realize is that those risks and liabilities for their big companies are nothing new.... they're just newly realized.  On the other hand, if the small or micro cap market never attracts overly-emotional investors in the first place (and it usually doesn't), then these diminutive stocks are generally not victims of the kind of panic-pullback we're struggling with right now.  You see where this is going? I'm not going to preach though - the hard numbers do the preaching for me.  Numbers Don't Lie  On Thursday, 144 listed stocks with market caps of $2 billion or more were up or flat, while 1,144 stocks of the same market cap group were down. That's 11% of them being up for the day.  Also on Thursday, 1466 listed stocks with market caps of less than $2 billion were higher or flat for the day, versus 3209 stocks of a comparable market cap being in the red. The math works out as 31% of this group holding their ground or advancing.  Night and day? No, but even if you were just throwing darts, your odds of picking a winner from the small cap group were three times better than with the mid/large-cap group (not to mention there were a lot more to pick from).  Just in the interest of good research though, I did the same for the week-to-date numbers. And, I got a similar result.  For the mid/large cap group week-to-date, 134 are higher, and 1,150 are lower; I took out the break-evens (there weren't many). That translates into about 10% of these stocks being in the black for the week.  For the small/micro cap group week-to-date, 1,099 are up, while 3,452 are down; 24% of the stocks in the group are up for the week.  The disparity starts to shrink when you start looking at longer timeframes, but in longer timeframes, most of the market's stocks (regardless of size) are making forward progress because the market is net bullish in the long run. The goal here is to find the best way to survive and thrive in a rough, bearish environment. The data speaks clearly on the matter - the difference is too wide and too consistent to chalk up to mere chance.  To be fair, I'm under no illusion that the odds still aren't technically against you.  On the flipside, unless you're just picking stocks randomly, your odds are still seriously better with the small caps, and even just a little picking skill can cut out a great deal of the losers from the pile. Moreover, in my experience, picking small cap winners is actually easier, as they tend to behave a little more consistently than media-jostled large caps.  Bottom Line  So, the question you have to ask yourself is simple.... "Do I really think we're headed towards the dreaded double-dip?" Lots of people are saying it, but not everybody means it.  If you don't, then there's no need to worry about any of this.  If so (and for me, tepidness is as undesirable as a double-dip), then you know what you have to do - it's time to get serious in your search for small stocks the market isn't likely to press downward on while large caps are imploding and amateur investors are panicking.  A little more work to dig up these small and micro caps? Yes. In fact, I'll specifically suggest using a combination of fundamental and technical criteria to find the best of the best, and the strongest of the strong - you'll need every edge you can get.  I suspect some of these stocks will be names you've never heard of, with floats and volumes that are bordering on uncomfortable; that's kind of the point.... they're so small, the rest of the market isn't even thinking about them, good or bad. If you're not interested in put options, inverse ETFs, or short selling though, that extra work and discomfort may well be your only remaining path towards gains in the foreseeable future.  One last thing - check out the nearby image...... it couldn't have been scripted any better, but I promise this is real. Even today we're seeing superior performance from the small and micro-cap groups, and clear weakness from the large mega caps. The nanos are a little off-kilter, but you get the idea - these relative numbers are becoming the norm.  As always, we'll share trading ideas as they present themselves.  Helping you get more out of the market,  James Brumley  Editor - SmallCap Network Newsletter    From the Community New Commentary  Take the Hint Already! Looks at STSA, FSYS, and SVA If you're looking for a "lease with an option to buy" trade, Fuel Systems Solutions, Inc. (NASDAQ:FSYS) may fit the bill. The short-term range has setup a decent bullish swing trade, and the potential for a major breakout is on the table as well.  Don't Be Late to the Party: TOMO, HHGP, HEV Sometimes the best picks are the obscure ones nobody talks about much, but become obvious to most after the fact. That's Hudson Highland Group, Inc. (NASDAQ:HHGP) right now. It's a headhunter firm, and as Dennis Askew points out, even a modest improvement in the jobs front will provide lots of leverage for Hudson Highland.  Dollar, Gold, Oil and the SP500's Mid-Week Trading Video We thank Chris Vermeulen for posting his video outlook for gold, oil, and the market. We'll warn you now that the gold bugs may get a little hot under the collar, but he's got a valid point about that trade.  Moving the Ball Forward: ZGEN, KOPN, MNKD Can you say 180 degree turnaround? That's what MannKind Corporation (NASDAQ:MNKD) just gave us. The company just competed an important Phase III trial of an inhalable insulin. And on a technical basis, the gains over the last few days are nothing compared to the potential if MNKD can break above the ceiling around $7.30.  When Little Things Are Big - Looks at ARNA, BMOD, and DRI It may not look all that impressive with a daily chart, but when James Brumley took a step back and looked at a longer-term chart of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), he actually saw something quite compelling - a paradigm shift is underway.  New Stock Picks  James Brumley added two new picks to his public portfolio this week, hoping to catch a couple of bargain opportunities at near-term lows. The first one was Frontier Oil Corp. (NYSE: FTO), and the second was Sinovac Biotech Ltd. (Nasdaq:SVA), each at a 5% allocation. Both picks are aligned with his sector-based strategy discussed back on June 18th.  John Monroe allocated 10% of his portfolio towards Quidel Corp. (Nasdaq:QDEL) earlier this week, stating the stock is at the lower range of a longer-term uptrend, and has seen a lot of insider buying activity of late. His target price of $22 would be close to a double from his entry and the stock's current price.        We Value Your Feedback Got comments, questions or suggestions? Send 'em on over: Email the Editor If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC  4653 Carmel Mtn Rd  Suite 308 #402  San Diego, CA 92130   Share the SCN Newsletter If you find the Small Cap Network Newsletter informative and profitable, please forward our newsletter alert service to like-minded friends and associates who share similar market interests.   Ensure Newsletter Delivery To ensure newsletter delivery, you can add any additional email addresses you may have to the Small Cap Network Member List. 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