Catalysts

Technical

Price level & Volume

I hope you have checked out the intro to "Technical Analysis". Technical catalyst are breakouts and breakdowns. Yes it is that simple. The stronger the broken support (breakdown) or the broken resistance (breakout) is the stronger the catalyst can be valid. To determine the strength of according level you simple ask yourself two questions: "How often did the daily candlestick chart "touch" that considered price level?" AND How well does the touched price level correlate with the biggest volume spikes in that time frame? Thats it. Yes it sounds unbelievable simple, the reason is, it just is that simple. But keep in mind, the further you go back in time the less important the level is, as it is not so "fresh" in other traders minds! Usually a one year daily chart is sufficient.

 

Remember the higher the volume and the more often a level was touched, the more significant it is to many people! 

outstanding shares & Float

The number of shares outstanding is the total number of shares a company owns. Some of them might be restricted and bound to special people or institutions, and are therefore not available for public. The number of shares available for us traders is called the "float", those are the shares that are floating around in the stock market. The next point is not 100% thing but you should have this in the back of your head. The higher the float, the quicker the price can move.  It is a simple matter of demand and supply. Ask yourself, how much would you willing to pay for the something that is rare, in contrast to somethings you find in abundance? Be careful shorting low floaters as it can turn on you much quicker than you think!

 

The lower the float, the greater is the spikeability potential!

 

 

News

There are only few really meaningful news, you can count for penny stocks. The first are "EARNINGS", which are published 4 times a year, so each quarter, and is known as earning season. You do not try to guess earnings, you do not hold through earnings, or do any anticipation. You just wait for the reaction. If a stock is moving, because of earnings, regardless how good or bead they are, as you never know what is priced in and what not, you have a positive buying opportunity. 

 

The second one are contract winners. So if you see a moving stock, that has a huge deal with a industry leader, military contract, public institutional contract etc... you also have a good chance of buying it. An acquisition is NOT a contract winner!

 

Offerings can be seen as a general bearish sign. An offering is an increasing of shares, to so the company has more money. If a company cannot generate revenue with their product, and the only way to get money is by issuing more shares, something is fundamentally wrong with it. Therefore you have a short opportunity. PLEASE, always check their cashflows and revenues, if the company truly needs money, some companies just wanna expand.

Hot Sector

Just a few words to hot sector news. There several sectors that get "hot" over the year e.g. biotechnology, oil, gold, marijuana etc. During this short phases, any related company with some positive news, has the potential to spike, as there are so many people they think that they will get rich with one single stock. You do not! It just takes dedication, work and around 1500-2000 trades and you can make a million or more.

Fluff & promotions

 

So everything else I consider as general fluff. Sometimes are billionaire investments or other short lived catalyst, but I cant count on things that work less then 30% of the time. If there is not a news related to the above mentioned categories, I only play the chart and the technical side. I see the best edge there. The following are a few promoter groups.

 

 

Promotions

Promotion happens all the time. Why? Simple, crappy companies, with no money, no real product line, barely any customers still need money. The only product they are left with are their shares outstanding. Some companies hire, special stock promoters that are paid to promote the stock. And that leads to short runners, where you can make a ton of money! (picture by Timothy Sykes). The following list of promoter groups was created by Tim Grittani, and is still just an overview. If a stock is promoted and you has enough volume you can use them to generate money!