A dead cat bounce is a short term recovery in the price of stock eventually followed by a continuous downfall. It is derived from the phrase that even a dead cat will bounce if it falls from a great height. This price pattern is usually recognized in hindsight. The analyst may attempt to predict that recovery will be temporary by using certain technical and fundamental analysis tools.
It is a curse for long term investors when price increases the investors who aren’t used to Bear markets often end up buying more shares and eventually suffering increased losses. However short term investors may squeeze out profit from the temporary reversal.
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