In lieu of Current Thoughts I submit my latest article on Seeking Alpha.
For those not familiar with the terminology;
DEFINITION of ‘Dead Cat Bounce’
A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce is a small, short-lived recovery in the price of a declining security, such as a stock. Frequently, downtrends are interrupted by brief periods of recovery – or small rallies – where prices temporarily rise. This can be a result of traders or investors closing out short positions or buying on the assumption that the security has reached a bottom. A dead cat bounce is a price pattern that is usually identified in hindsight. Analysts may attempt to predict that the recovery will be only temporary by using certain technical and fundamental analysis tools.
BREAKING DOWN ‘Dead Cat Bounce’
A dead cat bounce is a price pattern used by technical analysts. It is considered a continuation pattern, where at first the bounce may appear to be a reversal of the prevailing trend, but is quickly followed by a continuation of the downward price move. It becomes a dead cat bounce (and not a reversal) after price drops below its prior low. Short-term traders may attempt to profit from the small rally, and traders and investors alike may try to use the temporary reversal as a good opportunity to initiate a short position.
Here is the article:
Gold: Now That’s A Dead Cat Bounce! What’s Next?
Gold tried to break out but failed and now has had a good pop.
Don’t be fooled by this; we are heading lower in prices.
Are we headed to below $1,000 in gold now?
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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