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Penny Stock Basics

6 Common Stock Catalyst Examples

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Written by Timothy Sykes
Updated 2/2/2021 11 min read

Learning how to spot common stock catalyst examples — and knowing how catalysts can move stocks — is crucial to your everyday trading.

Stock catalysts have the potential to drastically move a stock’s price. Traders rely on stock catalysts so they can get in on the big moves.

But stock catalysts don’t have the same effect every time. Sometimes they can move a stock big time, and sometimes nothing happens. It’s important to learn as much as you can about the stock market so you can understand why that is.

In this post, I’ll go over the most common stock catalyst examples so you can better prepare to catch big moves. And I’ll go over where to find stock catalysts

What Is a Stock Catalyst?

A stock catalyst is any piece of information that can influence a stock’s price. It can pertain to a company, a sector, or the overall market.

In science, a catalyst is something that increases the rate of reaction for a substance. Stock catalysts work similarly. They can cause a surge in volume, which often leads to a breakout.

In the stock market, there are hard catalysts and soft catalysts. When an event directly affects a company, that’s a hard catalyst. When there’s an indirect relationship to the company, it’s called a soft catalyst.

Stock catalysts today can make a stock surge or plummet, depending on whether the news is good or bad for the company.

Examples of Stock Catalysts

examples of stock catalyst
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Stock catalysts examples include product launches, FDA approvals, lawsuits, government regulations, earnings … any number of things.

Traders who study common stock catalysts can be better prepared for upcoming stock catalysts — and potential price action.

Let’s go over some stock catalyst examples…

Stock Catalyst Examples: #1 Global Pandemic

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Is this a common stock catalyst example? Let’s hope not. But since it caused so much mania in the markets, it’s worth mentioning. The 2020 pandemic caused some INSANE moves.

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.

There was also a big surge in food delivery stocks, like Blue Apron, which benefited from the lockdown and stay-at-home orders.

Here’s Blue Apron’s one-year chart…

stock catalyst examples aprn chart
APRN chart: 1-year, 1-day candles (source: StocksToTrade)

Check out the huge spike the stock had because of the shutdown. Those are the types of catalysts that day traders look for.

I trade this niche because even if the overall market’s plummeting, penny stocks don’t care. And they continue to follow predictable patterns.

Stock Catalyst Examples: #2 Government Regulations

Government regulations usually affect whole sectors, not just individual stocks.

Think about weed stocks and how they spiked after some states legalized marijuana.

Government regulations can have positive or negative impacts on different sectors, depending on the news. Keep up with the general news so you can be prepared and react to what’s happening in the markets. Don’t think you can bend the market to your will.

Stock Catalyst Examples: #3 Product Launches

Product launches are great because they’re company-specific.

Product launches can have a big effect on an individual stock — unlike things like government regulations or pandemic news, which can move entire sectors.

When you think of a product launch, you might think of a new smartphone being announced. This is exactly the kind of thing to watch for with these catalysts.

Stock Catalyst Examples: #4 Lawsuits and Investigations

Lawsuits and investigations are stock catalyst examples that can drag a stock’s price down.

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.

Check out Kodak’s six-month chart…

stock catalyst examples kodk chart
KODK chart: 6-month, 1-day candles (source: StocksToTrade)

You can see that on July 28, Kodak had insane volume, and the stock started spiking. There were a few green days in a row before it started to fall. It fell hard and fast after the announcement of a class-action lawsuit against the company.

This is a great example of why I always expect the worst with every penny stock company. That way I’m never disappointed when there’s a negative catalyst or the stock fails. Aim for singles and move on to the next.

Stock Catalyst Examples: #5 Earnings Season

We must mention earnings season when we’re talking about stock catalyst examples. Earnings season comes around four times a year, typically in January, April, July, and October.

The quarterly earnings season is one of the most important times for a trader. Pay close attention to the market, because earnings winners can have huge upsides.

But note that stocks aren’t earnings winners just when they beat analysts’ estimates … There’s more to it. Earnings winners occur when the market reacts well to the earnings, whether the company beat the estimates or not.

One of the most important things I teach: Don’t play guessing games. If you want to play guessing games, you might as well go to Vegas and find a casino.

I didn’t make over $6 million in trading profits because I’m a good guesser.* I put countless hours into studying predictable patterns and the market. And I make a trading plan for every trade.

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Your chances of being a self-sufficient trader are zero if you only buy stocks based on gut instincts.

(*These results are not typical. Individual results will vary. Most traders lose money. My top students and I have the benefit of many years of hard work and dedication. Trading is inherently risky. Always do your due diligence and never risk more than you can afford to lose.)

Stock Catalyst Examples: #6 Clinical Trials and FDA Approvals

Biotech companies will announce the results of a clinical trial or FDA approval of a treatment. These catalysts can cause huge moves.

Once again, don’t play guessing games. Like earnings, clinical trials and FDA approvals can be positive or negative catalysts. If you happened to be invested in a biotech company that had negative news from a clinical trial, your account might blow up.

Instead of playing guessing games, react to the news. If the news is good, weigh your risk/reward, and trade it if you like the setup.

Check out my 30-Day Bootcamp to learn about risk/reward, patterns, how to find a strategy that works for you, and much more.

Upcoming Stock Catalysts: How Can You Identify Them?

upcoming stock catalyst and how you can identify them
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One of the hardest things about stock catalysts is identifying them. So how can you find news that actually matters?

The best way to find upcoming stock catalysts is to use a stock catalyst screener. I use StocksToTrade every day because it specifically helps me find momentum in penny stocks.

And the StocksToTrade Breaking News Chat feature is awesome. Two former Wall Street pros scan through penny stock news to find the most promising items with the potential to move a stock’s price. It helps make searching for news catalysts so much easier. If you use it, you don’t have to sift through all the garbage press releases. The two guys that run it do that for you.

Check it out for yourself … Sign up for a 14-day trial of Breaking News Chat and StocksToTrade for $17.

(Full disclosure: I helped develop StocksToTrade and I’m a major investor.)

How Can a Trader Benefit From a Stock Catalyst?

When traders are prepared, they can potentially capitalize. Without preparation, they won’t succeed.

So start with the stock catalyst examples I listed for you in this article. Start tracking them and see how they can move stocks. That preparation can help you benefit from stock catalysts and help you spot the hot sector.

Finding the hot sector in this niche is crucial. Hot sectors constantly change, but there’s so much potential upside with hot-sector stocks…

That’s because the hot sector gets the most volume. And volume brings volatility, which is what we want as day traders.

I’ve found success in this niche because I prepare for catalysts.* The StocksToTrade Breaking News feature helps me prepare too, but I’m ultimately the one who executes the trades.

In my Trading Challenge, I help traders learn the best ways to prepare themselves for what the stock market brings. Who knows what the stock market will bring in 2021? Not me. All I know is that if you don’t study, you won’t get anywhere. If you’re willing to put in the time and dedication, you’re already ahead of the game.

Apply for my Trading Challenge if you’re willing to put in the time and dedication…


stock catalyst examples conclusion
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There are lots of different examples of stock catalysts. Study as many stock catalyst examples as you can so you’ll be prepared to recognize one.

There are tons of resources out there to help you find the best catalysts and use them to your advantage. For example, StocksToTrade’s Breaking News Chat can help save you time. And it can potentially help you find even better setups because you have two pros helping with the heavy lifting.

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And if you’re serious about trading, apply for my Trading Challenge so you can learn how to execute trades on stocks when you see catalysts.

How have these stock catalyst examples helped you? What are your favorite stock catalysts? Let me know in the comments…

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Author card Timothy Sykes picture

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. Read More

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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”