What makes an episodic pivot
In his post on mastering episodic pivots, Kullamägi credits Pradeep Bonde (Stockbee) for the setup and notes that his own definition may differ from Bonde's. He describes the logic as news that catches the market off guard and forces a revaluation of the stock, and points out that institutions build positions over months rather than in a single day.
The mechanical definition is the same regardless of the catalyst: a gap up of 10% or more with heavy volume near the open, as set out in both that post and the three-setups article.
The catalyst types listed publicly
Between the two posts, the following types are named. The examples in brackets are the ones the posts themselves give.
Earnings and guidance
Unexpectedly strong results or raised guidance. The main type in both posts.
Political and regulatory
Government regulation and political events (bank and prison stocks after the 2016 US election are cited).
FDA and biotech
Drug trial results and FDA decisions.
Contracts and partnerships
New business that changes the outlook for the company.
Sector EPs
A red-hot sector where stocks gap and move without stock-specific news.
Macro
Listed in the three-setups article alongside political news.
Why earnings come first
The episodic pivot post says the most success has come from earnings EPs because they are easy to find and easy to understand, and calls biotech EPs the most difficult, despite three years of biomedical studies (the FAQ lists Biomedical Laboratory Science at Karolinska Institutet). Earnings also arrive on a known schedule, which makes them easier to study as a group; see earnings season as a study calendar.
Studying the other types (our questions)
The posts list these types without a separate rulebook for each. The questions below are this site's own suggestions for study, not rules from the source material.
- Regulatory and political: does the change affect revenue directly, and does it apply to one company or a whole group?
- FDA and biotech: is the company close to selling the product, or still years from revenue? A trial result and an approval are different events.
- Contracts: how large is the contract relative to current revenue, and is the partner named?
- Sector: how many names in the group gapped together, and which one had the strongest volume?
Tagging catalysts in a chart database
The episodic pivot post describes building a database of thousands of historic examples and looking up the news behind each one. Adding a catalyst tag to every entry makes it possible to compare follow-through by type over time, instead of relying on a few memorable charts. The structure of such a database is covered in build a chart database.
The catalyst review
- Confirm the gap is 10% or more.
- Check early volume against the average daily volume.
- Identify and tag the catalyst type.
- For non-earnings types, write one sentence on why it changes the value of the company.
- Record the outcome after one and three months, by type.