General
dead cat bounce
What does dead cat bounce mean?
A short-lived recovery in the price of a declining asset that fools people into thinking the worst is over, before the slide resumes. The grim image: even a dead cat will bounce if it falls far enough. Traders use it to dismiss rallies they don't trust.
"Don't get excited, that 4% pop is a dead cat bounce, it'll be back at the lows by Friday."
Origin
Coined by Financial Times journalists Horace Brag and Wong Sulong in December 1985, describing a brief rally in Singapore and Malaysian markets during a wider downturn.
Frequently asked questions
What is a dead cat bounce?
It's a brief, misleading price recovery in the middle of a larger downtrend, before the decline resumes.
Where does the term dead cat bounce come from?
It comes from the grim trader saying that even a dead cat will bounce if it falls from a great enough height.
How do you tell a dead cat bounce from a real recovery?
It's hard to tell in the moment — a dead cat bounce is usually only confirmed once the price rolls over and makes new lows.
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