Looking the the past two Black Swan event market crashes, you might notice something in common that is the Dead Cat Bounce. What is a Dead Cat Bounce?
DEFINITION OF ‘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 or derivative, such as a stock or an index such as the S&P500. Frequently, downtrends are interrupted by brief periods of recovery – or small rallies – where prices temporarily rise.
Prices never go straight down or up. For stocks, a stock price has been in decline and is making a small recovery, however, the price decline is far from over.This can be a result of traders or investors closing out short positions or buying on the assumption that the security has reached ...
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