מבחן הדקת החתול המת: תופעה פיננסית

Definition

• A "dead cat bounce" is a financial market phenomenon where a stock or security experiences a brief and temporary recovery in price after a significant decline.

Characteristics

• The rebound is short-lived and often followed by a continued decline in price.
• The bounce is usually driven by a rush of buying activity from investors who perceive the security as undervalued or oversold.
• The bounce is often accompanied by high trading volumes.

Causes

• The initial decline in price can be due to various factors, such as a company's poor earnings report, a decline in the overall market, or a shift in investor sentiment.
• The subsequent bounce can be driven by a variety of factors, including:
  • Short covering: investors who had short-sold the security may be forced to buy back the shares to limit their losses.
  • Bargain hunting: investors may see the security as undervalued and buy it in hopes of making a profit.
  • Technical factors: the security's price may bounce due to technical indicators, such as oversold conditions or a reversal in trend.

Importance

• The dead cat bounce can be a trap for investors, as it may lead them to believe that the security has reached a bottom and is about to recover.
• It's essential to distinguish between a genuine recovery and a dead cat bounce, as the latter can result in significant losses if the security continues to decline.
• Identifying a dead cat bounce can help investors make more informed investment decisions and avoid potential losses.