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Price shows bounce characteristics within a severe decline. Dead cat bounce patterns are present alongside falling knife warnings and significant drawdown from peak. The recovery may be temporary rather than structural.
State
Dead cat bounce warning
Emergence
Price showing bounce characteristics within a severe decline. When dead cat bounce patterns are detected alongside falling knife warnings and significant drawdown, a temporary price recovery may be occurring within a larger structural decline.
Limits
This story identifies pattern characteristics, not decline continuation. It does not claim the bounce will fail, predict further losses, or assess whether this is genuinely a dead cat bounce or a real recovery. The pattern label describes historical resemblance, not guaranteed outcome.
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Explanation
Each signal represents an independent observation about the decline and bounce: Dead Cat Bounce measures three quantities together over a 60-week window: how deep the prior decline was, how partial the subsequent bounce is, and how weak the bounce volume is relative to the selloff volume. A high score means a steep prior decline with a thin, low-volume recovery — it does not predict whether the bounce will hold or fail. Falling Knife Warning detects characteristics of acute, rapid price decline. Active warnings indicate the decline has been severe. Drawdown from Peak measures the total decline from the stock's highest price. Significant drawdown provides context for the severity of the decline. When all three align, they describe a bounce within a severe decline. The pattern label captures the shape; it does not predict the outcome.
Interpretation
This story identifies a pattern, not a prediction. It does not claim the bounce will fail, guarantee further losses, or recommend selling. Dead cat bounce patterns can prove wrong, and real recoveries can look identical initially.
Required Signals
Dead Cat Bounce
Composite of prior decline severity, bounce recovery, and volume weakness
Falling Knife Warning
Composite of rapid decline, selling pressure, and volatility expansion