Dead Cat Bounce
Funny title, not so funny if you get caught. The dead cat bounce is a term used in the stock trading world to explain a sudden upswing in the market, that seemingly comes for no real purpose. If you are not on your toes it can cost you big time, and we have all newbie traders will eventually get caught by one, yours truly included. I will never forget my first experience and can claim a little bit of my self respect back because it was early in my career and I was still ignorant.
Be honest we have all rushed in when we thought the market was turning bullish and it looked like easy pickings. Only to come up short a day or two later when the market plunged. My gut tells me that today’s upswing in the market is just that a dreaded “Dead Cat Bounce”. It usually refers to a particular stock, but it can also apply to the whole market.
It was used first back in 1985 when a Financial Times reporter Christopher Sherwell reported that a stock broker whilst referring to a bounce back after a fall in the Singaporean and Malaysian stock markets after they had experienced a fall during a recession period of that year. I found this information on Wikipedia (More) ^(http://en.wikipedia.org/wiki/Dead_cat_bounce)I am a little suspicious that we are seeing just that in today’s market rise. So I have one of my computers watching the market continuously today to see what happens.
Be Cautious
MR. Ed
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