Thank you to the few who emailed me directly (regarding my recent DCB post), either confused by the "term" or origin of Dead Cat Bounce. I didn't create it! It's been around for a long time. In analyzing trends (particularly modeling stock trading), when a stock is falling in price and then regains some positive movement (at a line we may show as the lower band of resistance), this "bounce" of the resistance may only be temporary, and a bigger decline is coming. Someone picked a cat; if a cat was falling and hit the ground, it would bounce, then land and be done (might bounce more than once. So, when tracking a trend and it goes down, then a slight bump up, then another decline to a terminal floor, well, there you go, a Dead Cat Bounce. My parallel to this modeling is TODAY in the US economy, where we've just been beat down the past two years, and "suddenly" things are alleged to be getting better (but underlying this all is many more banks failing, millions of foreclosures about to happen, more write/charge offs for bad debts, more bankruptcies and more magical cash being pumped into the economy). It's just one of those sinking feelings, a slight calm before the next storm. Right now is where the risk takers are profiting from short term investments; a last huh-rah. Watch the money. Fix your monthly costs. www.ptre.net
Tuesday, August 11, 2009
Dead Cat Bounce clarified
Thank you to the few who emailed me directly (regarding my recent DCB post), either confused by the "term" or origin of Dead Cat Bounce. I didn't create it! It's been around for a long time. In analyzing trends (particularly modeling stock trading), when a stock is falling in price and then regains some positive movement (at a line we may show as the lower band of resistance), this "bounce" of the resistance may only be temporary, and a bigger decline is coming. Someone picked a cat; if a cat was falling and hit the ground, it would bounce, then land and be done (might bounce more than once. So, when tracking a trend and it goes down, then a slight bump up, then another decline to a terminal floor, well, there you go, a Dead Cat Bounce. My parallel to this modeling is TODAY in the US economy, where we've just been beat down the past two years, and "suddenly" things are alleged to be getting better (but underlying this all is many more banks failing, millions of foreclosures about to happen, more write/charge offs for bad debts, more bankruptcies and more magical cash being pumped into the economy). It's just one of those sinking feelings, a slight calm before the next storm. Right now is where the risk takers are profiting from short term investments; a last huh-rah. Watch the money. Fix your monthly costs. www.ptre.net
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