What is a dead cat?

In the field of finance, the term "dead cat reflection" is a reference to a short recovery period for the security. Although there may be a temporary and modest increase in stock price price, momentum will stop quickly and the price either level or begins to decline again. In general, the increase in stock price is limited and may include shares that have not been considered favorable in the first place. This term can also be used to describe the behavior of the stock market in general, for example in the case of a temporary recovery on the market that is declining. The terrible name of this concept is based on a movement that could be expected when a dead cat is dropped from a height - it can do a bit, but not much before settling at a lower level.

low -value warehouses

Although the short period of increased decline followed are the necessary nature of the dead cat of a bounce, this term does not apply to all the supplies that follow this formula. In generalThe term is used only for securities that are considered to be low as the best circumstances. If low -value shares are used a brief short rise in value and then returns to the previous and false price levels, which is the norm, the reflection is considered to be nothing but aberration and is therefore not a real interest for serious investors.

bad prospects

valued, which are susceptible to the reflection of dead cats, share several common characteristics. First, securities are not held in high respect based on previous performance. Secondly, there are no indicators that the securities are able to achieve and maintain higher value on the current market. In the end, there are no indicators that permanent growth were achieved if there was a major economic shift on the market. Essentially, securities do not prove any potential to increase the value and maintain this higher price per unit.

little to get

in general is fromDead cats reflective. To achieve the maximum return of such a movement, the investor would have to buy just before the start of the reflection and sell the stock just before the decline. A jump from a dead cat could appear as short as two consecutive business days, so efforts are rarely worth the return.