No two potential small cap stock trades are built the same, including the brewing potential from Capstone Therapeutics Corp. (NASDAQ: CAPS), Hyperdynamics Corporation (AMEX: HDY), and The PMI Group, Inc. (NYSE: PMI) right now. Still, all three are worth a look, beginning with the least-good one and working our way towards the best (a ranking which, by the way, is strictly my opinion).

Good: Though in the red today, Capstone Therapeutics Corp. shares have made their way back above the 50-day moving average line (purple) after getting trounced in April and then continuing to drift lower. The real attraction here, however, actually lies in the fact that CAPS is just so oversold and ripe for a bounce.

Still, I rated it the weakest of the three as the volume behind the recent buy-back of CAPS has been anemic. I do think there’s big potential here, but Capstone Therapeutics will have to convince others of that first. And, it’s only going to do that by setting up a base – and drawing some volume – here above the $0.26 level. Watchlist it.

Better: It’s a little bit tough to explain why Hyperdynamics Corporation is so compelling right now, but I can preface it by saying it’s the shape of this small cap stock’s chart – not the momentum (there isn’t any) – that’s suggesting a move higher is in the works. Simply put, HDY is making a slow, arcing curve higher, tracing the similarly-arced 50-day moving average line (purple), and fueled by support at the 200-day average line (green). [Like I said, it’s nothing that can be quantified.]

For what it’s worth, I’ve marked the chart with curved arrows to trace the bullish groove I see HDY falling into. Given that it’s been a ceiling more than once in the past moth and a half though, you may want to wait until the 100-day moving average line (gray) is broken above before pulling the trigger on Hyperdynamics. Personally, I wouldn’t wait… but that’s just me and not necessarily right for your risk profile.

Best: I don’t want to imply that The PMI Group is the most ‘sure thing’ by calling it the best of the three small cap stocks in question here. But, compared the potential reward, I do find PMI the most compelling…. now that it’s punched through its 20-day moving a average and currently attacking it’s 50-day line at $1.45.

At the heart of my optimism over PMI, however, isn’t the chart – it’s the fact that this surety/title insurer is rallying on mostly bad news.

I suspect the worst case scenario (and then some) has been baked into PMI since the beginning of the year. It was down nearly 80% from its January high at one point, after all. Now that there’s some certainty – for better or worse – at least the market no longer has to price in a crazy amount of risk. Any move above $1.45 is a bullish trigger.