Dead Cat Bounce
A short-lived rally inside a larger downtrend that fades fast and gives way to more selling.
The name comes from an old trading line: even a dead cat bounces if it falls far enough. After a steep drop, price snaps back as short sellers take profit and bargain hunters buy. The relief feels like a bottom.
Then the bounce runs out of buyers and the decline resumes, often to new lows. Telling a dead cat bounce from a real reversal is hard in real time; it usually only looks obvious later. Light volume on the bounce is one warning the recovery may not hold.
Related terms
A prolonged stretch of falling prices and weak sentiment, usually marked by a drop of 20% or more.
Bull TrapA false upside breakout that lures buyers in, then reverses and leaves them holding losses.
DumpA rapid, heavy sell-off that drives price sharply lower, sometimes coordinated to catch other traders.
DipA short-term drop in price, often viewed by buyers as a discount within a larger uptrend.