Amazon: Dead Cat Bounce?

Amazon: Dead Cat Bounce?

When stocks make big moves lower there tends to be some kind of bounce or rally when the move ends. This is because overly emotional sellers pushed it too far. At this point, traders jump in and try to make a profit before the stock moves higher and returns to equilibrium.

If this rebound is only small or minor, it could be a sign that the downtrend will resume. These are called dead cat bounces and one may have just happened to shares of Amazon.com, Inc. (NASDAQ: AMZN).

On July 29, shares fell by about 7%, which was a huge move for the stock. Despite this, there has only been a small rebound. This action could mean the downtrend may soon kick back into gear.

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