Bull Trap Vs Dead Cat Bounce

If the security has been on a bullish trend you spot a reversal by looking for the stock to trade to break the lower uptrend line.

Bull trap vs dead cat bounce. In the above image we analyzed the bitcoin price on the daily time frame. In fact a bull trap can occur everywhere but a dead cat bounce always happens during a downtrend. There have been 13 dead cat bounces in the last century using dow jones data here because its the longest and cleanest data set. Guess what another name for a dead cat bounce is a bull trap.

Karen petrou managing partner at federal financial analytics agrees with cramer. If the fed does step in the aptly named dead cat bounce in which prices recover only for a short while should not be mistaken for resurrected animal spirits. Even a dead cat will bounce if it is dropped from high enough. Dead cat bounce vs.

Using the current djia bounce of 38 if this is a bull trap it would only be the 4th largest so hardly unprecedented. We represented the difference of a bull trap and a dead cat bounce in the below image. She believes the dow is merely experiencing a dead cat bounce writing in a financial times op ed. They believe stocks are going up.

A dead cat bounce can be a signal to bulls that the tides are turning. But it will be a bull trap because massive consumer price inflation price controls and shortages are coming. Heres why the dead cat bounce in stocks is likely to continue for now. Obviously when comparing it to a dead cat bounce you are looking for a bearish trend to turn bullish for the stock to break above the upper downtrend line.

Bull trap on the bitcoin chart. Note that from 1929 to 1932 when the market reached its lowest there were several apparent recoveries as the whole thing crumbled. What is a dead cat bounce. Theres an old saying in investing.

Bears are the opposite they believe stocks are going down and sell short into every spike.