Definition of Dead Cat Bounce
A Dead Cat Bounce is a temporary recovery from a prolonged decline, followed by the continuation of the downtrend. A Dead Cat Bounce is typically extremely short-lived recovery in the price of a declining security, as it is derived from the popular Wall Street phrase "even a dead cat will bounce if it falls from a great height". Downtrends are frequently interrupted by brief periods of recovery where prices rise slightly. This can be a product of several different factors; for example, traders closing out short positions or by purchasing that security because they assume it has reached a bottom.