Here's the Most Important Breakout of the Year...

The ship’s about to sail on one of our “trades of the year.” The big breakout we’ve been waiting for is here.

And you don’t want to be left behind on the dock when it leaves, standing there in your Hawaiian shirt and holding a pina colada, lookin’ like a doofus.

OK, here’s the quick and dirty: After three months of choppy, erratic trading, the major averages are once again breaking out to new highs. And our trade of the year is leading the charge…

Remember this past earnings season? Well, you probably wish you had amnesia. Almost every single major company got torpedoed—especially the mega-caps that performed so well in 2013. Caterpillar, Procter & Gamble – even Microsoft – got flooded after missing earnings expectations.

But through all this carnage shone a small beacon of hope—and a signal that a new breakout was gathering steam. Yes, even though blue chips were flaming out, small-caps were firing up the boilers.

Like I told you late last month, when the market starts falling apart, there’s sometimes one group of stocks, one sector, or one industry that avoids the carnage. That’s a huge tell. When the big money is buying on a bad day, you know you’re probably onto something…

So, while the market looked dead in the water a few months ago, small stocks went full speed ahead. The Russell started churning forward in the fall (it has outperformed the S&P since October 13th – the week stocks bottomed out). And now it’s making a good 20 knots

Here’s what you need to know:

The Russell 2000 small-cap index didn’t budge in 2014. Sure, we experienced some back-and-forth action, but aside from a short-lived breakdown in October, small-caps essentially treaded water all year.

That sets us up perfectly for a big comeback year for small-caps…

Regards,

Greg Guenthner
for The Daily Reckoning

P.S. After three months of choppy, erratic trading, the major averages are once again breaking out to new highs. And our trade of the year is leading the charge…If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE.

The Daily Reckoning