Catalysts are a major pillar of my trading strategy. I love to trade stocks with big events happening around them.
Why? Because when a company has an eye-catching headline with its name involved, it usually brings some juicy volatility to the share price.
And this week, certain events are transpiring that could have major implications on cryptocurrency, the biggest tech stock in the world, and the overall markets.
Keep in mind that this is a news-driven market. With so many volatile headlines occurring this year, traders are particularly sensitive to negative shifts in the news narrative.
If you’re unaware of these headlines, you could miss a potentially five-star setup. Or worse, you could make a mistake that leads to losses.
Speaking of headlines, I’ve been keeping up with the news this year thanks to StocksToTrade Breaking News Chat, and so should you. See for yourself … Try StocksToTrade today!
Now that your news and charts are in order, let’s break down the major catalysts I’m keeping an eye on this week.
Keep reading and I’ll show you…
Protests at Foxconn Factory in China
Over the weekend, protests erupted outside of the Foxconn plant in Zhengzhou, China.
Foxconn is the biggest manufacturer of Apple Inc.’s (NASDAQ: AAPL) iPhones in the world (the Zhengzhou factory makes 70% of iPhones sold).
Its workers are fed up with the Chinese Communist Party’s (CCP) ‘zero COVID’ policy, which is continuing to impose harsh restrictions on billions of people in mainland China.
The protests are more against the CCP than Apple or Foxconn, but they could still move AAPL quite a bit.
In fact, they already have…
AAPL was down more than 2.5% on Monday as traders grappled with how the protests will affect the company’s bottom line.
By Monday night, the protests had seemed to calm down considerably. Heavy police presence prevented the crowds from organizing.
That said, what happens over the rest of the week will be extremely important for AAPL.
I’ll keep watching this story unfold (and I suggest you do too) as it could lead to some potentially promising trades on both sides of the options chain.
Jerome Powell’s Speech
Anyone who’s traded this year knows that when Federal Reserve Chairman Jerome Powell speaks, the market listens.
That’s why I’ll be paying close attention to Powell’s comments today (he’s scheduled to speak at 11:30 a.m. Eastern).
A lot of traders seem to be sure that the Fed is nearing a pivot towards a more dovish monetary policy (i.e. lower interest rates).
If Powell’s speech is interpreted as dovish, that’ll support the current narrative and likely send the market higher.
On the other hand, if Powell throws cold water on the pivot idea, all bets are off and the market could get totally obliterated.
We’ve seen this happen before…
Powell’s now-infamous August 26 “Jackson Hole speech” ended the summer rally altogether, sending the market down for two straight months after.
All this to say, if you’re not listening to Powell’s speech, you’re missing a huge part of what’s driving the market this week.
Congressional Hearings Into FTX Begin
Two weeks ago, I laid out the mind-blowing story of FTX founder (and recently-exposed crypto fraud) Sam Bankman-Fried.
Long story short: Fried allegedly used user deposits on his exchange to fund his own terrible trades, causing his company to go bankrupt and his customers to lose everything.
Now, this Thursday, the first congressional hearings into the FTX scandal begin, with Commodity Futures Trading Commission (CFTC) Chair, Rostin Behnam, set to testify.
(That didn’t take long … did it?!)
We’ll have to wait and see if these hearings bring some further volatility to crypto.
I’m pretty surprised that Bitcoin (BTC) has held the $16,000 level as strong as it has so far. If it holds the support, I’ll be less interested in trading this setup.
But if BTC loses that level, and crypto enters a phase of capitulation, I’ll think about trading puts on crypto stocks.
Here are the four optionable crypto stocks I’ll be watching for potential put-buying setups:
- Coinbase Global Inc. (NASDAQ: COIN)
- Marathon Digital Holdings Inc. (NASDAQ: MARA)
- Riot Blockchain Inc. (NASDAQ: RIOT)
- ProShares Bitcoin Strategy ETF (NYSEARCA: BITO)
Major global catalysts have rocked the U.S. stock market as much as any other factor this year.
If you aren’t staying up-to-date on these stories, you’re trading with blinders on.
But if you pay close attention to what’s happening, you could potentially discover a trade opportunity you never would’ve found otherwise.