# Catalyst Quality Scoring

The analyzer assigns a 35-point catalyst component from the event type, text clues, and optional upstream grades.

## High-Quality Catalysts

| Catalyst | Why It Matters |
|---|---|
| Guidance raise / beat-and-raise | Suggests the market's forward estimates may be too low |
| FDA approval / Phase 3 success | Can change revenue trajectory for smaller biotech names |
| First major earnings acceleration | Can trigger institutional discovery |
| Major contract or customer win | Can validate product-market fit or revenue visibility |
| Regulatory approval | Can remove a major uncertainty or unlock a market |

## Medium / Context-Dependent Catalysts

| Catalyst | Caveat |
|---|---|
| M&A | Often caps upside around the deal price; useful but may not trend |
| Product launch | Needs proof of adoption or demand |
| Partnership | Quality depends on partner credibility and economics |
| Short squeeze | Can be powerful but fragile and liquidity-sensitive |

## Lower-Quality Catalysts

| Catalyst | Caveat |
|---|---|
| Analyst upgrade | Usually weaker unless it confirms a true inflection |
| Story/theme only | Can run quickly but often reverses quickly without fundamentals |
| Vague news | Must be downgraded unless price/volume confirmation is exceptional |

## Negative Text Deductions

Events mentioning dilution, secondary offering, investigation, lawsuit, resignation, downgrade, or similar adverse language should be treated cautiously even when price initially reacts well.

## Manual Review Questions

1. Is this a one-day headline or a durable revaluation?
2. Is the event surprising relative to what the market already expected?
3. Does the event change revenue, earnings, TAM, survival odds, or investor sponsorship?
4. Is the stock already very extended before the event?
5. Can the EP-day low be used as a realistic stop?