This Stock's Pullback Could Lead to a Triple Digit Gain...READ MORE
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This Stock's Pullback Could Lead to a Triple Digit Gain
It is always possible that a stock will bounce back after a sell off. The rally might just be a short-term move. In the stock market, many traders call this a dead cat bounce.
A dead cat bounce is defined by Investopedia as "a temporary recovery from a prolonged decline or a bear market that is followed by the continuation of the downtrend. A dead cat bounce is a small, short-lived recovery in the price of a declining security, such as a stock.
Frequently, downtrends are interrupted by brief periods of recovery — or small rallies — where prices temporarily rise. The name "dead cat bounce" is based on the notion that even a dead cat will bounce if it falls far enough and fast enough."
While the name is colorful, the potential profits are the important consideration for traders. The risks must also be considered by traders.
As we explain in our latest article, a recent sell off in a tech stock could be setting up a rally in the stock. That could be a short term move or a long-term move. Either way, risks must be managed. For short term traders, the risks of a long position could be managed with an options strategy.
You will find the details of a strategy that does that along with the specific trade we found in our latest free educational article that is available right here...
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