Patrick Archbold, The Remnant: There is an amusing investing term called a ‘dead cat bounce.’ It follows from the idea that “even a dead cat will bounce if it falls from a great height.” A dead cat bounce refers to a temporary recovery from a prolonged decline followed by a continuation of the downtrend. The dead cat bounce is a sucker’s bet. Suckers, thinking that the worst is over and that things have reached bottom, start buying up stock. In reality, the temporary rally is caused by investors shorting the stock purchasing the worthless stock to cover long-term bets against the company creating short-term buying pressure. Read the rest here.
