Dead Cat Bounce or Reach Bottom: Market Opinions Diverge
U.S. stocks rose sharply on Tuesday as major stock indexes rebounded after recording their worst week of performance in two years last week. $S&P 500(.SPX)$ $NASDAQ(.IXIC)$
Led by a rebound in European stocks and Asian equities, the bear market reversal in U.S. stocks is not driven by a single condition.
The prevailing view is that any recent rebound will be nothing more than a "dead cat bounce" that will eventually end in failure. A dead cat jump is usually a rally that lacks fundamental support and is likely to be followed by renewed weakness.
Market opinions diverge:
Oppenheimer: 7 of 10 indicators on the market bottom checklist is yes!
According to data, the institutions' orders still show bearish signal:
Goldman Sachs said in a report last Tuesday
we notice hedge fund clients have seen a "significant" climb in short-selling volume since last week, with broader investment strategies or macro products such as ETFs dominating last week's U.S. stock short-selling trades.
Last Monday, when risk assets plunged across the board, Commodity Trading Advisors funds sold about $11 billion of bonds and $21 billion of stocks. Meanwhile, Target Volatility Funds also cut cross-credit and bond holdings.
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I believe the current rally is a Dead Cat Bounce as the headwinds of high inflation, slowing global economy and the ongoing war in Ukraine are still here. However there has never been a better time than NOW to bargain hunt quality stocks. Thanks @WallStreet_Tiger for your excellent update of the latest US market conditions.
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Very well