The dead cat bounce is a sudden and temporary increase in stock price caused by investors erroneously believing that the stock price’s reached its lowest. The dead cat bounce can only be fully accurately determined with concrete data in hindsight.
How do you know if a stock has a dead cat bounce?
One way to stay alert for a dead cat bounce with a particular stock is to consider whether the now-rising stock is still as weak as it was when its price was falling. If there’s no market indicator as to why the stock is rebounding, it might make sense to suspect a dead cat bounce. Dead Cat Bounce or Lowest Price?
Can a dead cat bounce if it falls from a great height?
Derived from the idea that "eeven a dead cat will bounce if it falls from a great height", the phrase is also popularly applied to any case where a subject experiences a brief resurgence during or following a severe decline. This may also be known as a "sucker rally".
What if you threw a dead cat off a 50-story building?
If you threw a dead cat off a 50-story building, it might bounce when it hit the sidewalk. But don't confuse that bounce with renewed life. It is still a dead cat. The spot oil price has recovered from under $10 a barrel to over $13 -- but that also should not be confused with renewed life."
