Ep 68: Dead Cat Bounce During Bearish Market Sell-offs

Now in this week’s episode number 68, we’re going to hone in and focus on a Dead Cat Bounce During Bearish Market and Sell-offs, so I apologize the use for the term of the dead cat bounce, you know it does refer to a dead cat bouncing and there’s a reason for that.

They actually use it in the market space in the marketplace, so it’s a common industry term, I didn’t come up with it that is just what it is. That’s what we’ll be covering is the dead cat bounce, what it is and spotting it in the current market conditions, in what’s going on underneath in the market place’s.

Then really how to spot them and how to look for these dead cat bounces, so first off to get things going I have talked about the market for multiple weeks already and those of you that have been following me, you know that we were discussing it and talking about moving short into the marketplace, when it was clearing in breaking the price level at 2000 on the S&P.

As you know I was short at that point and as you know I was talking about things getting very bad and very nasty at that point of that breaks, and if this level breaks at 1860, we could see things even much worse and you saw that come out just yesterday here on Wednesday, where those stocks went down a good five hundred and thirty points on the Dow and 50 – 60 points on the S&P.

We got down all the way in terms of price levels, we got down on the lows of 1812 on the S&P. Now today we had a slight little bounce or pop towards the end of the day. We had a little pop yesterday but we still were selling off quite heavily.

What does this mean and what does this tell me? You know we’ve already talked about this and i don’t want to keep beating the same thing over and over in your minds because the move has been made and now the next move can be made again if this next level clears on a clean break, which would be the 1858 to 1855 on the S&P.

If we break that level cleanly, meaning on a full bar break so that means probably you’ll see 1834 or even 1816. If we break those levels you could see some other very bad massive sell-offs in the marketplace.

It’s something to pay attention to and it’s something to watch very closely.

If you look at it on a week-to-week basis we’ve been red bars for the whole month on a week-to-week. If you just color code the bars and put it on the weekly chart, last few weeks have all been red and that’s really where the direction and the momentum is at the moment.

What is a Dead Cat Bounce?
We’re looking at a few price levels but we do get some violent bounces in the market space and some of these violent bounces are called dead cat bounces.

The reason they call them a dead cat bounce and I can’t really draw on the screen at the moment, maybe this video would be better to do kind of like as a short lesson on what is a dead cat bounce but to make things simple as just say you have a Dow Jones building right here on top of a mountain.

We have a mountain top, where we have this is the Dow Jones or the S&P and when this is on top of the mountain, pretend that a cat is dying off of this building and when it’s dead it continues to fall and the faster it falls from the higher up the bigger the bounce you’ll get.

So, once it hits this side of this mountain it’s going to bounce a little bit and once it bounces it’ll just bounce a little bit because it’s dead there’s nothing there for it to jump up and be alive and it will continue to roll back over and fall down the mountain.

Posted at: http://tradersfly.com/2016/01/ep-68-dead-cat-bounce/



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