After a rough years in the public markets, you might consider today’s brilliant trading good news. Any positive price move is a win, right? Quite.
The tech-heavy Nasdaq composite index rose 3.4% today as other major US indices rose smaller amounts in a hall-of-fame start to the trading week. (That the markets are popping up for Disrupt is pretty nice, I must admit.) Even more important for the tech industry, though, is sector-specific news.
Good news? Sure, but only if you like soggy cats.
Let me explain. When the value of a particular commodity or asset falls sharply, it often follows the declines by bouncing back a bit. If the underlying forces that made the security negative remain in place, such rebounds often prove short-lived and not indicative of the true “bottom” of a particular trading range. This is often referred to, somewhat artfully, as a “dead cat bounce,” or more specifically, the kind of modest bounce a cat’s corpse can get when it hits concrete after falling from a high window.