Dead Cat Bounce Or True Bottom?

🌟🌟🌟Is the US market experiencing a Dead Cat Bounce or has it hit a true bottom? For new investors, a dead cat bounce refers to a short lived recovery in a declining market. It is a temporary spike before further declines resume. In contrast, a true bottom represents the point at which a market has found sufficient support to begin a sustained recovery. In the current environment, distinguishing between these 2 scenarios is rather challenging given mixed market signals and the Trump factor.

Dead Cat Bounce: Technical indicators suggest that the recent rally in the US markets could be a Dead Cat Bounce. While the markets have rebounded from recent lows, uncertainties which include geopolitical tensions, tariff related disruptions, continue to weigh on the broader sentiment. Trading volumes indicate that much of the recent trades maybe short term profit taking rather than a sign of renewed strength.

The Trump Factor: The US President Donald Trump is rather unpredictable. After taking a tough stance on the tariffs initially, he said that he is wiling to take a more friendly approach towards trade talks with China. However China said that there are no trade talks taking place currently.

The CEOs of Walmart and Target had privately warned President Trump this week that his sweeping tariff policy could disrupt supply chains and lead to empty shelves in the coming weeks, according to CBS news.

True Bottom

In contrast, some analysts said that optimism over easing trade tensions and better than expected quarterly earnings from some blue chip companies, have boosted investor confidence. If these factors persist and support levels in the markets hold firm in the coming weeks, the rally could signal the long awaited bottom rather than the Dead Cat Bounce.

What should investors do in the face of such uncertainty in the markets?

In an uncertain market that maybe exhibiting a Dead Cat Bounce, investors should proceed with caution and adopt strategies that focus on preserving capital while positioning for long term opportunities.

My strategy is to maintain a long term perspective by diversifying my portfolio across different asset classes such as Equities, Bonds and even commodities such as Gold as well as different sectors. A well diversified portfolio can cushion against volatility in any singe area.

I will also continue to dollar cost average rather than investing a large sum of money at once during this volatile period, spreading my investments over time.

I will maintain a portion of my cash and liquid assets to provide me with the flexibility to capitalise on new opportunities if the markets move decisively in one direction. Cash reserves can act as a buffer during volatile times and position me to buy quality assets at attractive valuations once the market confirms a true bottom.

Whether the market is experiencing a Dead Cat Bounce or a True Bottom, the best approach is to remain calm, sticking to my long term principles and avoiding impulsive moves.

Warren Buffett said that "Over the long term, the stock market news will be good".

@Tiger_comments @TigerStars @Tiger_SG @CaptainTiger @TigerClub

Dead Cat Bounce vs. True Bottom: Where Are We Now?

After a series of declines, the market has become increasingly cautious about any rebound. Most people believe this is merely a dead cat bounce in a bear market, with further drops likely to come. However, some argue that with Trump softening his stance on tariffs, the impact of tariffs on the market may lessen going forward. If a recession can be avoided, the market's downside potential might be limited. Investors are divided on where we are in the current cycle. What’s your take? Is this a dead cat bounce or have we already hit the bottom?

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Dead Cat Bounce Or True Bottom?

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