A dead cat bounce is a brief price rebound within a larger downtrend that subsequently resumes. The expression describes a recovery that fails to become a sustained reversal. It is an informal market metaphor, with no universal minimum rebound size or maximum duration.
A rebound can leave the trend intact
Suppose an asset falls from 100 to 60, rebounds to 72, and later drops to 50. The recovery from 60 to 72 is 20%, yet the price at 72 remains 28% below the earlier 100 level. The later fall illustrates why the intervening bounce did not establish a lasting uptrend.
Bargain buying, short covering, or temporary relief after negative news can contribute to a rebound. The price path alone does not identify which explanation applies.
The label relies on what happens next
During the initial recovery, a dead cat bounce can look like a genuine change in trend. Calling it one before renewed weakness is a hypothesis; the completed pattern is clearer afterward.
A failed rebound can trap buyers who assumed the decline had ended. Conversely, assuming every recovery will fail can expose short sellers to losses. The term provides context about an observed sequence, not a dependable forecast or automatic trading instruction.