dead cat bounce

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From the idea that a cat dropped from a height might bounce without this indicating any actual life after hitting the ground.



dead cat bounce (plural dead cat bounces)

  1. (trading, idiomatic) A temporary recovery in the price of a financial instrument which has fallen rapidly and is expected to fall further in the long run.
    • 1988, Sarah Graves [pseudonym; Mary Squibb], The Dead Cat Bounce (Home Repair is Homicide Series; 1), New York, N.Y.: Bantam Books, →ISBN:
      Now, if you look at the chart of a stock that has suffered a collapse, you will see that at the bottom of each drop there is a small uptick, a rise in the price. This uptick, representing the smart money getting out because it knows what is coming, and fools getting in because they don't, is known as the dead cat bounce, so-called because if you drop a dead cat off a skyscraper the cat will bounce, too, but the movement doesn't mean the cat is alive.
    • 2002, Iain Banks, “Dead Cat Bounce”, in Dead Air, London: Little, Brown and Company, →ISBN:
      There's this thing called the Dead Cat Bounce. It's a stock market term, I believe. What it's talking about is the fact that even a stock that is essentially worthless and really going nowhere but down for ever can register a slight upward movement, just for a bit, because there is generally a floor for almost everything. The comparison rests on the fact that even when a cat hits the pavement from forty stories high and dies instantly, it'll still bounce back up a little.
    • 2013, Thomas N. Bulkowski, “Swinging Tools and Setups”, in Swing and Day Trading: Evolution of a Trader, Hoboken, N.J.: John Wiley & Sons, →ISBN, page 163:
      Avoid taking a position in stocks that show dead-cat bounces. Those stocks see their price drop at least 15 percent in one session. A stock showing a dead-cat bounce tends to bounce higher and then decline, sometimes suffering additional dead-cat bounces three and six months later (if earnings related []).



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