Trend Signal Now: Small Stocks. Big Trends.

Tuesday, September 30, 2025

Welcome to The Strazza Letter, a free note with market insights from me, All Star Charts Chief Market Strategist Steve Strazza.

I think the move in small-caps is just getting started.

Positioning is lopsided, sentiment is ripe, and seasonal tailwinds are underway.

Meanwhile, breadth is expanding down the cap scale, and the Russell 2000 has been outperforming the S&P 500 for the past several months.

I think this is the perfect recipe to finally break small caps out of their multi-year holding pattern.

Here's the Russell 2000 knocking on the door to new all-time highs:

I went live earlier with my friend and Editor of The Chart Report, Patrick Dunuwila. We broke down the bullish small-caps story, beginning to end.

He agrees with everything I'm seeing and saying, and always brings a unique perspective to these discussions, as someone who reads more research than anyone I know.

He also brought along some of his favorite actionable ideas in the small-cap space.

For my part, I went back to the well of old winners and pulled up a name we traded last year with Breakout Multiplier. It turned out to be one of the best trades of my career.

This is one of those stocks that perfectly represents the current cycle.

It's speculative, it's "arkky," and it's got AI in its name and Nvidia on its shareholder list.

It's a small stock, but it's quickly climbing the market cap scale.

I'm talking about SoundHound AI $SOUN, which falls into our small-cap basket with a market cap of about $6.3B:

SoundHound went public in May 2022 and has been carving out a massive base ever since.

After a failed breakout attempt last year, the stock is once again pressing against a critical resistance level at its IPO highs near $18.

With one in every three shares available to the public held short, a breakout could fuel an explosive squeeze.

If SOUN clears $18, we want to be long with an initial target of $29. Over longer timeframes, our objective is near the second extension level at $46.

This stock appeared in our Freshly Squeezed scan recently, which we re-geared to have a small-cap focus. We actually did this with five of our most popular flagship scans, and plan to do so regularly in the future, as long as this theme continues to play out.

If you're interested in our full portfolio of small-cap trade ideas, take advantage of our special offer and sign up for All Star Charts premium risk-free today.

Steve

Steve Strazza | Chief Market Strategist, All Star Charts

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