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Why Catalysts Matter In This Market

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs
Updated 5/6/2026 6 min read
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Catalysts matter in any kind of market.

But in THIS market you can either…

Win by focusing on legit catalysts…

Or get crushed when hype and speculation turns into a rug pull.

And if you’re new, that can mean blowing up an account.

One catalyst has been en fuego…

We’re in the middle of earnings season and in case you haven’t noticed…

Earnings Winners Are Hot 

There are several different types of catalysts (read to the end to learn more).

But right now the biggest catalyst in the market is strong earnings (and AI-driven capex by big tech companies).

You know what they say…

A rising tide lifts all boats.

And THAT has helped the Nasdaq and S&P 500 hit new highs day after day.

But all that activity has also made it so that if you’re not careful, you can get caught up in hype.

Which is why in THIS market, it’s super important to pay attention.

Whatever the catalyst.

Here are two recent examples…

Bloomin’ Brands, Inc. (NASDAQ: BLMN), which owns Outback Steakhouse, reported strong Q1 earnings yesterday (May 6).

Source StocksToTrade BLMN 5/6/26 earnings winner
Source StocksToTrade BLMN 5/6/26 earnings winner

The BLMN chart is a clear example of a real company with strong earnings that the market loved.

Now compare that to EZGO Technologies Ltd. (NASDAQ: EZGO), which was a huge social media pump…

Source StocksToTrade EZGO 5/5-6/26 social media pump and rug pull
Source StocksToTrade EZGO 5/5-6/26 social media pump and rug pull

As you can see, there was a huge rug pull yesterday morning.

That’s what happens when inexperienced and trusting newbies fall for social media hype and speculation.

This is why I prioritize earnings winners over social media pumps (ESPECIALLY when the overall markets are hitting new highs).

More on catalysts below. First…

Millionaire Moves

I recently sat down with Anthony Nieto for an interview

In the interview we talked about…

  • How I turned roughly $12,000 into a 27-year trading and teaching career
  • The upcoming PDT rule change
  • Why journaling every trade matters
  • Why my rule #1 is STILL to cut losses quickly
  • AND… Finding meaning beyond trading

Watch it, study, and take notes!

Also, be sure to register for my friend Ben Sturgill’s options bootcamp next week. Ben is going to show you why profitable options trading is BORING.

There are a limited number of free tickets left so register today…

Apply for a FREE Ticket To Ben Sturgill’s Options Bootcamp 

Catalyst Watch

Since we’re on the subject of catalysts, here are a few more to look out for (and links to other posts about catalysts.

Earnings Winners

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Like BLMN, all public companies have to report earnings quarterly (although there’s talk that could change). Positive earnings can make a stock run for several days (or even weeks).

Contract Winners

When a small company wins a contract with a much larger company, it can spike the stock. Like earnings winners, they can run over several days or weeks.

More Breaking News

News Catalysts

Any positive (or negative) news about a company can affect the stock price. One important thing to understand about penny stocks is that the companies often drop press releases to self-promote the stock.

Hype and Speculation

This is more like what happened with EZGO. The social media hype around the stock this week has been pretty wild. You can check it out on X and see what I mean.

Billionaire Plays

When a billionaire invests in a company and it gets out as news or an SEC filing, it can spike the stock. The billionaire play works better if it’s a small company.

On My Radar 

And THIS is what it’s all about for me…

Key Takeaway

If you’re serious about trading then learn everything you can about catalysts.

Here are 3 resources to help you grow your knowledge account:

Now go study. Hard!

Cheers,

– Tim Sykes

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity.
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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”