from small caps

The bulls are finally paying a small price for their excessive victories over the last month or so, but don't assume today's modest dip is the beginning of a more meaningful end. Either way, there are a few high potential small caps to watch, as they have more than a little trading potential (though not necessarily bullish). Here's a better look at DragonWave, Inc. (NASDAQ:DRWI), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), and Nextwave Wireless Inc. (NASDAQ:WAVE).

I have to at least give credit where it's due, so I'll acknowledge the bulls are working hard on getting Nextwave Wireless Inc. (NASDAQ:WAVE) over its proverbial hump. On the flipside, I think now's the right time to point out the hurdles WAVE will need to topple before those bulls make any meaningful progress with this small cap. The end is in sight though.

Essentially, WAVE is caught in a horizontal range. The lower end of the range varies between $0.30 and $0.38, and the upper end of the range is about $0.60. Not only is that where Nextwave Wireless topped today, but it's an area that's been trouble more often than not over the last several months. And, at this point I can't help but wonder if the 200-day moving average line (green) is presenting a problem.

Either way, today's 37% jump from Nextwave Wireless Inc. doesn't solve the bigger problem. In fact, it may be the problem. While slow and methodical moves past ceilings have been effective of late, this kind of explosive, one-day surge has fostered little follow-through in the current environment. That's not to say WAVE can't kick-off a breakout with a bang. But, this stock's attempted to do so more than a few times, and failed to do so each time. I'm looking for a pullback to the $0.38 area.