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Dead Cat Bounce, Explained

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You may have heard people discussing a "dead cat bounce."

But do you know what it means?

Well, it the phrase is derived from an old expression that "even a dead cat will bounce once if it falls from a great height."

In finance, a dead cat bounce refers to a brief recovery in a declining trend.

Interestingly, it's hard to spot a dead cat bounce when it's really happening. But it generally has these elements:

  • The stock’s price has fallen consistently;
  • The stock regains value, but for a brief time;
  • The stock loses value again with consistent a downward trend.

Watch the video above to learn more about this.

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