Dead Cat Bounce

What is a dead cat bounce?

A dead cat bounce is a temporary, short-lived rally in asset prices after a prolonged decline or a bear market followed by the continuation of the downtrend. Frequently, downtrends are interrupted by brief periods of recovery, or small bounces, during which prices temporarily rise.

The name “dead cat bounce” is based on the idea that even a dead cat will bounce if it falls far enough and fast enough. It is an example of miller’s rally.

Key points to remember

  • A dead cat bounce is a short-lived and often sharp rally that occurs in a secular downtrend.
  • This is a rally that is not suppor