Dead Cat Bounce
A Complete Guide
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but as long as you hear it mentioned within the context of trading, it refers to a particular phenomenon in the stock market
The idea of a “dead cat bounce” might sound somewhat alarming,
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The phrase comes from the idea that even dead cats will bounce if they fall from a high enough point.
When asset prices reach high levels and then drop, they may recover temporarily.
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Why should you care?
Because, by following backtested trading strategies, you can use them to make a profit.
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What is a Dead Cat Bounce?
When a stock price decreases, it rarely just hurls straight down without experiencing a few peaks along the way.
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it may seem to undergo a slight recovery before returning to its previous low.
One extreme example of this is the dead cat bounce: when a stock price decreases,
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What are the Causes?
A bounce happens when pessimism begins to set into a bear market.
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If the market continuously displays a downward trend for weeks on end,
the conditions for a bounce begin to foster.
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