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Catalysts that move small caps

News, earnings, FDA, contracts — and how to judge a press release.

9 min · Intermediate

What you'll learn

• Identify the main types of catalysts that move small caps
• Judge a press release by its numbers, size relative to market cap and firmness
• Rank catalysts by quality to decide which movers deserve attention

Key takeaways

• The catalyst gives the crowd a reason to buy; share structure decides how far that reason can carry price.
• Judge a press release by its numbers, its size relative to market cap and whether it is definitive.
• Designations, MOUs and unnamed partners are weaker than approvals, contracts and reported revenue.
• The biggest premarket gapper is often the weakest story, so rank by quality, not percentage.

Glossary

• Catalyst — News or an event that gives traders a reason to re-price a stock, such as earnings, FDA data or a contract.
• MOU / letter of intent — A preliminary, usually non-binding agreement that may never become a definitive deal.
• Sympathy play — A stock that moves because a related company or hot sector has news, without news of its own.

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