Define: Dead Cat Bounce

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Definition: Dead Cat Bounce



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Full Definition of Dead Cat Bounce


A dead cat bounce is any sharp rise in prices after a severe decline. In order to have a true dead cat bounce prices must decline again following the bounce in prices. Investors who are fooled by a dead cat bounce and mistakenly believe that a market has turned around may buy into a still-declining market and suffer losses. Short sellers are only too happy to sell stock during a dead cat bounce. In order to recognize the difference between a dead cat bounce and a genuine reversal in the overall direction of the market, it is necessary to evaluate the market as a whole. Investors try to spot a dead cat bounce by relying on market indicators to assess the true nature of the market bounce. However, a dead cat bounce can sometimes fool even a market expert.


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Definition Sources


Definitions for Dead Cat Bounce are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 7th February, 2020