Since 2010, the average return for our weekly best scoring small caps has outpaced the R2K by an average 716 bps in the following year. The top performers from our report one year ago include DYAX up 103%, UEIC up 62%, and MW up 62%.

·        The best scoring small cap sector is utilities.

·        The top scoring small cap industry is diversified electronics.

The average small cap score is 53.19 this week, below the four week moving average score of 53.26. The average small cap stock is trading -25.22% below its 52 week high, -1.01% below its 200 dma, and has 8.37 days to cover held short.

Utilities, industrial goods, financials, consumer goods, and technology score above average. Healthcare scores in line. Services and basic materials score below average.

The best scoring small cap industry is diversified electronics (BELFB, SIMO, KOPN). Railroad carload volume growth continues to support demand for new railcars (RAIL, GBX, ARII). Specialized semi (SIGM, MPWR) is high scoring heading into launches of next generation smart phones and tablets. Management services (HSII, CRAI) and home healthcare (CHE, GTIV, AMED) round out our best scoring list this week.

No small cap basics baskets score above the universe average this week; trade up in market cap instead. No consumer goods groups score above average; however, auto parts (MTOR) score in line. In financials, focus on P&C insurers (GLRE, HMN) and banks (CFNL, SNBC, LKFN). C&I loan growth and ongoing easing of bank credit standards supports loan growth and trumps net interest margin headwinds. In healthcare, buy home healthcare and medical appliances (BABY, ZLTQ, SPNC, RTIX, CRY). Aerospace/defense (TASR) and general building materials (NCS) score best across industrial goods. The top services groups include rails, management services, and specialty retailers (MED, BKS, HZO). Diversified electronics, specialized semi, and business software (MSTR, NTCT, EBIX, CSGS) score highest in technology.