When it comes to trading, the main component is a catalyst.
If there isn’t a reason for the stock to move, there isn’t a reason to trade it.
That rule has saved us on more than one occasion.
Some newbies fail because they trade anything that’s running regardless of a catalyst. It’s not a smart idea.
So today we’re going to run through some examples of hot catalysts with real-world examples.
Up first is today’s hottest runner …
TOP Ships Inc. (NASDAQ: TOPS)
There isn’t a recent press release pushing this stock higher. That’s what we see most common.
It only takes a bit of sleuthing to uncover the reason for Wednesday’s +120% spike.
There’s a possible railroad strike looming in December. And TOPS is a maritime shipping company.
See the connection?
Companies are worried that a rail strike could delay business operations and deliveries. As a result, they’re looking for alternate shipping options.
And TOPS is an obvious choice for traders looking to capitalize.
There are a few other factors that make TOPS really attractive …
- Loa float: 3.5 million shares
- High Volume: +16 million shares today
- Former runner
- Tradeable price action
But at the center of it all is a catalyst. That’s the bedrock of a profitable stock spike.
And there are two other catalysts to keep an eye on right now …
#1: Holiday Season
The past few months were rough for big tech.
Companies like Meta Platforms Inc. (NASDAQ: META) and Amazon.com Inc. (NASDAQ: AMZN) posted dismal earnings due to high inflation and decreased demand.
But watch as some of these companies try to turn the ship around. Our main example today is AMZN.
They’ve already announced mass layoffs in an effort to cut costs. And early holiday data looks promising for the online retailer.
#2: China Battles COVID
The COVID-19 outbreak took a huge chomp out of China’s economy.
Recently we saw semi-violent protests in the streets of major Chinese cities in response to the absolutist ‘zero COVID’ policy.
Embed: https://www.youtube.com/watch?v=5_Q4xhn76YQ
But today we read China’s about newest plans to vaccinate a larger portion of the population in an effort to reduce lockdowns.
Already we’ve seen a few Chinese stocks turn bullish as a result.
For example, take a look at this Chinese EV stock, XPeng Inc. (NYSE: XPEV) …
#3: FED Speech
Jerome Powell is hinting that interest rate hikes could slow in December.
That’s a huge bullish catalyst for stocks. But nothing’s set in stone yet.
We’ll have to wait and see how the market reacts.
Three out of four stocks follow the market. If we see a big price bounce, pay attention to low-priced spikers with a low float.
Benjamin Bull
Managing Editor, Dollar Stock Club
