Dead cat bounce

That’s the Wall Street phrase for a market that is rebounding for no particular reason, except that if you drop a dead cat from high up enough, it will bounce when it lands, but that doesn’t mean it’s alive.

The strong rallies these past few days in the stock market may well continue for a while (hey, the market did dodge a bullet early this week, several of them in fact, so a little jubilation is certainly in order) but the underlying fundamentals haven’t changed, so that cat will be falling back to earth soon enough.

  • Up, down, up down. I wonder how long this will go on. I get tired of losing big one day, then making some back the next, only to lose big again the day after that! Ugg!

  • I’m waiting for this relief rally / dead cat bounce to look like it’s peaking, then I’m buying at or in the money XLF and QQQQ puts 4-6 months out.

    This is the strategy that works best for me. Go several months out, then you have lots of time. And only do it with amounts of money you feel comfortable with.

    Also have long-term holds like TIPS funds and some stocks. These I hold several months to years.

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