Dead-Cat Bounce
Animal rights activists and some mutual fund investors prefer the term dead-analyst bounce, but that’s another issue.
There comes a time in every bear market when even the most ardent bears re-think their positions. Value investors may think the bottom has been reached, so they nibble at the market a little. Momentum players may look at their indicators and find oversold readings. The bottom line is that buying pressure awakens, even if only briefly, to send the market up off its lows.
They say that if dropped from a high enough point, even a dead cat will bounce. This translates to the financial and commodity markets surprisingly well, as can be seen in Figure 2. Gold prices (weekly chart, three years) peaked in January 1996 ...
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