But the easiest, by far, is using StocksToTrade. It provides everything I listed above along with charts, fundamental data like the float and outstanding shares, and a platform to trade from. Again, a catalyst is only a part of the overall picture. This is a great lesson on how quickly a stock can surge. It’s also a great lesson in how far a stock can fall after the hype is over. NIO has traded as low as $1.20 since the article and hasn’t recaptured its $8 level from before the feature.
Analyst ratings from a securities brokerage affect investment decisions and are often stock catalysts. A stock catalyst is any news or event that leads to an increase or decrease in a stock’s price. Hard catalysts affect the company directly, while soft catalysts affect the company’s industry or global economy. However, dividend investors may see merit in analyzing market catalysts. The dividend yield is one of the most valuable metrics for dividend investors. It expresses a company’s annualized dividend as a percentage of a stock price.
Trade Only High-Volume Stocks
Companies that produce masks, potential vaccines, or faster tests have seen massive movement. Hard catalysts refer to something directly related to the stock. That can be an earnings report, a new contract, or a press release. It’s anything with a direct relationship to one specific company. Should seek the advice of a qualified securities professional before making any investment,and investigate and fully understand any and all risks before investing.
This is for informational purposes only as StocksToTrade is not registered as a securities broker-dealeror an investment adviser. The markets and penny stock action were slower this week … It’s the week leading up to the biggest summer holiday of… On the other hand, an earnings report could show a company lost money … But the loss wasn’t nearly as much as the market expected. This could cause the stock to jump significantly. Let’s say an earnings report shows that the company made money. Well … maybe it didn’t make as much as the market expected.
Buy the Rumor, Sell the News
Part of confirming stock catalysts involves understanding the context of the event. This may require an understanding of the company, its operations, its supply chain’s workings, etc. The other part of confirming a catalyst involves employing tools that prove the stock catalyst impacts a price trend. Since the ballot measure passed, it was a bullish catalyst for Uber and Lyft (positively impacting their stock prices).
- But note that stocks aren’t earnings winners just when they beat analysts’ estimates … There’s more to it.
- Investing in sectors that are dictated by catalysts requires an understanding of potential catalysts moving forward.
- If you’ve been following the market at all this year, I don’t have to tell you how powerful a catalyst the global pandemic is.
- These companies instantly gained a much larger audience for their products.
- First, he resigned as CEO and took the position of chairman of the board.
Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. Since FDA approval is the final stage for a new drug before it is allowed into the market, this is often the most dramatic catalyst, but it is not the only one. New pharmaceutical medicines can make companies massive profits, but the path from promising drugs to FDA approval is fraught.
Examples of Stock Catalysts
I know that’s terrible to say … But if you wanna find opportunities in the stock market, you have to know what actually moves it. Nothing gets the attention of a smart trader like bad news. Check out “The Volatility Survival Guide” I created with my friend Tim Sykes for this crazy market.
- Product launches can have a big effect on an individual stock — unlike things like government regulations or pandemic news, which can move entire sectors.
- If a trader can predict a price swing, they can enter a position (either buying the stock or shorting the stock) and then exit the position once the price change occurs.
- Learn more about dividend stocks, including information about important dividend dates, the advantages of dividend stocks, dividend yield, and much more in our financial education center.
- The stock went from $2 to $29 in just four days.
Lots of traders will sell their shares when there’s news of a lawsuit or investigation involving a company. A good example of this happened this year with Eastman Kodak, a global company involved in printing and imaging. When the pandemic first hit, we saw the overall market plummet. And then a penny stock company would put out a press release saying it would start producing masks, and the stock would double or triple in a single day.
Interested in trying the number 1 trading platform? You should look for multiple reasons to build a case for a trade. On July 29, KODK announced a partnership with the federal government to start bringing medical manufacturing back to the U.S.
Twitter especially has tons of up-to-the-minute info. There are hundreds of different news sites with analyst ratings, earnings reports, and press releases. Right now, the COVID-19 pandemic is a major world event. You hear about the need for testing, masks, and a vaccine. Let’s look at all the catalysts involved here … First, there’s the pandemic, which is global news. Then there’s the lack of available food at grocery stores that many people experienced personally.
If the report is only a day or two old, it’s likely driving the price action. In the past, news events like Ebola, weed legalization, and even police body cameras have driven related stocks to make huge moves. Get your copy and start learning the rules I follow to trade penny stocks.