An example of a sucker’s rally, a Dead Cat Bounce is a temporary and short-lived uptrend within a prolonged decline/bear market that is followed by a continuation of prevailing downtrend. Small rallies are frequent in downtrends, but must be taken for what they are (brief blips within a larger trend). A Dead Cat Bounce is considered to be a continuation pattern, where at first the bounce may be taken as a reversal, but is then quickly overtaken by a continuation of the downward momentum. Of note, dead cat bounces are typically only seen in hindsight and are difficult to identify in real-time.
Dead Cat Bounce
Market Terms
We don't know everything about the markets. We're just devoted to learning. Taken from those smarter than ourselves, here's how we define Dead Cat Bounce.