What Is a Dead Cat Bounce in Investing?

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Woman looking at a stock chart on a monitor. — Image source: Getty Images.

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Investor confidence remained low, making the price rally nothing more than a dead cat bounce. It's worth noting that Wells Fargo stock eventually did recover but only months after that initial bounce.

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If technical stock analysis was reliably correct, then it would be easy to get rich by putting money into the stock market. Correctly identifying a stock price's low point or the start of a price rally is tantamount to attempting to time the market. Investors are much better served by buying and holding the stocks of quality companies in order to sustainably build their wealth.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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Wells Fargo is an advertising partner of Motley Fool Money. Adam Levy has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.