It’s important to have near-term catalysts for your stock, otherwise, you have no reason to believe the price will quickly move higher. Without a reason to expect a stock to jump in the near term, your investment could be dead money. It could just sit there, doing nothing.
Below are a few potential catalysts that you can look for to get your stock moving quickly.
1. Earnings.
Earnings reports are a common catalyst. Most companies announce earnings dates in a press release a few weeks before the report comes out.
2. Analyst upgrades.
When a new buy or sell recommendation is issued, stocks can move significantly. Give your trades the best opportunity to be upgraded. To do that, find stocks that analysts do not like. If most analysts already have “Buy” ratings on a stock, the chances of an upgrade are small. But if most analysts rate the stock a “Hold” or “Sell,” you can sometimes get a nice move higher when they upgrade it.
3. Short squeeze.
If a stock is heavily shorted, every tick higher in the price of the shares is causing losses and therefore problems for the shorts. Eventually, when the losses get to be too much, the shorts exit their position by purchasing the stock. But these purchases again creates more demand and pushes the price even higher. As the price climbs, more shorts buy the stock and you can get a powerful move from all the extra demand for the shares.
You need a catalyst that will push your stock higher in the near term. Stocks typically don’t make big moves for no reason. If you can’t find one, you may want to find a different stock.
Sven Franssen