Sunday, August 30, 2015

Term of the Day: Dead Cat Bounce

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August 30, 2015
Dead Cat Bounce

A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce is a small, short-lived recovery in the price of a declining security, such as a stock. Frequently, downtrends are interrupted by brief periods of recovery - or small rallies - where prices temporarily rise. This can be a result of traders or investors closing out short positions or buying on the assumption that the security has reached a bottom. A dead cat bounce is a price pattern that is usually identified in hindsight. Analysts may attempt to predict that the recovery will be only temporary by using certain technical and fundamental analysis tools.

Breaking It Down:

A dead cat bounce is a price pattern used by technical analysts. It is considered a continuation pattern...

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