Option Investor

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Dead Cat Bounce

A dead cat bounce is a period during a downtrend when even the most bearish of bears begin feeling a bit optimistic about the future, value investors step into the ring to go a few rounds and momentum investors start thinking that a position may be oversold. All of these pull together and result in buying pressure, which awakens the stock/market, even if only for a short period of time. Needless to say, this term is not a favorite amongst animal activists. The term dead cat bounce is derived from the saying that if you are high enough when you drop it, even a dead cat bounces.