A Dead cat bounce

Posted on 25 July 2011 by Douglas Chadwick

Last night and this morning has seen relieved stock markets pick up all over the world. Not a lot, but sufficient for European politicians to congratulate themselves in avoiding the threatened Greek and European meltdown. But of course it has not removed or resolved the problem. They have just kicked the" can" down the road and delayed the pain a few months for maybe somebody else to sort out. So the bounce we have seen in the markets may turn out to be what is described as a "dead cat bounce".  Throw a cat off a twenty story building and when it hits the concrete it will bounce back up. However it is still very much dead.
 
August is often said by investors to be the cruellest month. The Lords and Masters of the Universe are away on their luxury boats and at their luxury villas enjoying their ill gotten gains. Bankers, financiers and politicians are on their holidays. So less trading is done and the markets can drift South and fall away. So yet again watch the Saltydog numbers and be alert.