101 Reasons For a Dead Cat Bounce

When I was growing up, a particularly weird neighbor of ours, with a particularly odd sense of humor, had a particularly sick book she used as a "bathroom reader."  At the time, 101 Uses For a Dead Cat seemed to me to be one of the funniest books I had ever "read", mainly because it made my mother cringe.  She couldn't possibly see the humor in a dead cat being used as a window cleaning squeegee, bookend, or pirate peg leg.   

What does the sadistically funny book have to do with the stock market?  Well...nothing really.  Other than I'm expecting the proverbial "dead cat bounce" to begin shortly.   

Despite the negative technical trend-line violations, disappointing earnings, rising interest rates on rising debt levels, higher inflation, geopolitical concerns, collapsing housing market, weakened consumer, etc., etc., the daily DeMark Sequential indicators are actually calling for at least a short term bounce.  Not surprisingly, these signals coincide with Ben Bernake's testimony before Congress today (July 19th).  No matter what Ben says, the market might take this as an opportunity to believe the worst is over and relieve its very oversold condition. 

The DeMark Sequential indicators are giving either 9-13-9 or 9-13 "buy" signals across the major US indexes. 

In addition, the VIX gave a "confirming" DeMark buy set-up yesterday as the 150 minute chart hit a 9 set up count.  While the VIX signals aren't usually good enough to trade off of by themselves, they often coincide with other signals.

The one caveat is that if the market can't rally off of DeMark buy signals, then you better pour yourself a cold drink and sit down awhile...because it will be a long, hot and sick summer.   

Source: 101 Uses For A Dead Cat

Comments

[Paul]

What time did you publish this comment? Before the market opened? If you did, that's one great call. You should show the time of the posts along with the date.

[Contrahour]

Thanks. It was published at about 4 in the morning on July 19th. I didn't realize my posts didn't have a time stamp so I'll definitely add one.

Please don't rely on my trading calls. I'm just trying to give examples of how I use DeMark analysis. I try to post when I see a set-up worth mentioning but sometimes I don't get around to it until it's too late (like this post). I meant to get it posted a day before but got too busy.

What's more interesting is July 20th action. Talk about a dead cat bounce. It didn't even get an inch off the pavement.

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[Heidi]

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