Wednesday, April 08, 2009
The Dow Jones Industrials and the broader stock market rebounded for just a moment over the last week as President Obama was in Europe on a trip to meet with the G-20, a group composed of some of the world biggest economies and most influential countries.
The dead cat bounce, an old Wall Street insider term, refers to the saying that says, "Even a dead cat will bounce, if you drop it from enough a of height." The underlying behind the theory being that following a big enough crash, even something with no reason or logic to rebound will bounce back for just a moment, because of the underlying disbelief that it could have fallen that far, that fast.
With no immediate signs of relief in the United States job market, manufacturing or housing sectors, one can't help but wonder if what we saw at the beginning of this week was the dead cat bounce. As earnings season begins, the string of gruesome announcements to come is likely to continue to depress stock prices.