I made a small loom knit stocking to go into some gift baskets that I am making for Christmas this year.  I used the Knifty Knitter Flower Loom (I bought one at Walmart and one at Joann).  I have also made smaller versions using the Knifty Knitter Spool Loom by adjusting the number of rows for each section until it came out to be the balance that I wanted.  When using the spool loom, the knitted portion is too bulky and will not fit through the spool, it will just bunch up inside of it. 

These instructions in PDF form.

For my stockings I just used Red Heart worsted yarns in red and white and Lion Brand Fancy Fur in an off white color (its what I had on hand).

1.  Cast on all pegs of the flower loom using 2 strands of white and 1 strand of the fancy fur. Knit 5 rows alternating between knitting a row and purling a row. 

2.  Switch to red using 2 strands of yarn together.  I switched by knotting and cutting the tails. Knit 10 rows.

3.  Tie on 2 strands of white again, but don’t cut the red off.  (For every row next to the red, to prevent a gap in the stocking you will need to lift the red loop off of the peg on the edge and bring the white yarn around it.  Replace the red loop back onto the peg you removed them from.)  Knit over 6 pegs.  Turn, skip one peg and knit 4 pegs back.  Turn, skip one peg and knit two back.  Turn and knit two again.  Turn, knit four again (you will knit the two knitted and one on each end of the white).  Turn and knit 6.  You should be back to the place where you tied the white onto the loom.  Tie your white yarn again to the red yarn and cut the white off.

4.  Knit 5 rows of red.  Tie white back onto red and cut red.

5.  Knit 4 rows of white.  Remove by gathering off loom.

You now have a cute small stocking to use as an ornament on your tree or as a sweet gift!

For the spool loom these are the basic instructions, I believe this is using the larger end of the spool.  The smaller end makes adorable tiny stockings too.:

White, two strands three rows, purl, knit, purl.

Red, 7 rows e-wrap.

Heel, white, knit 4, furn knit 2, turn knit 2, turn knit 4.

Red again, 2 rows.

White again, 2 rows.  Gather bind off.