Dead Cat Bounce
Categories: Financial Theory, Stocks, Managed Funds
Sounds like a dance move from the Old West, but it actually refers to a terrible situation when the market plummets, rebounds very slightly, and then plummets again. The idea comes from the notion of dropping a cat off of a high building. It hits the cement—dead—and bounces a bit before a wet thud.
PETA: No cats were harmed in the production of this definition.
Example
The market has fallen from 5,000 to 1,200. Now it's at 1,400 and you think it's headed to below 1,000. That uplift of 200 points from 1,200 to 1,400 is the "dead cat bounce."