New Low Bounce
A dead cat bounce is the short-lived rally that follows a large, event-driven decline. Price makes a new 52-week low after a substantial drop, bounces, and then, in the pattern's classic form, resumes lower to an ultimate low beneath the event low. PatternGrade requires a meaningful prior decline before treating a bounce as a candidate.
- Bias
- Bearish
- Category
- Short Setups
- Scan cadence
- Every close
What has to be true for a New Low Bounce to trigger
- A substantial prior decline into the low
- A new 52-week low
- A bounce off that low
- The bounce occurring within an intact downtrend
How PatternGrade grades it
A larger prior decline and a bounce that stalls in a structurally meaningful place raise the grade.
Every scanner grades its hits A+, A or B from the pattern's own measurable structure. The grading is deterministic — the same chart always produces the same grade. It describes how closely the chart matches the pattern, not how likely anything is to happen; no hit rate or probability is attached to a grade. The reasoning is set out in the methodology.
What a New Low Bounce looks like in practice
A stock falls from $46 to $23 in two sessions on a failed trial announcement, on volume forty times average. Over the following seven sessions it recovers to $28, about a fifth of the decline, on volume that fades each day, then stalls beneath the $29 level where the collapse gapped through and rolls back over toward the lows.
How a New Low Bounce fails
The bounce turns into a genuine recovery. Not every collapse is terminal. Occasionally the market overreacts and the stock reclaims most of the decline, and a short taken on the assumption that all bounces fail can be run over quickly. The tell is participation: a recovery on expanding volume that reclaims the gap is not a dead cat bounce, whatever the initial decline looked like.
What this pattern is telling you
Distinguishing a dead cat bounce from a genuine bottom is only possible after the fact. Some bounces off event lows are the actual turn.
PatternGrade is not a financial advisor and does not give buy or sell recommendations. Targets and stops shown on a pattern are reference levels derived from its geometry, not advice.
How to scan for New Low Bounce setups
PatternGrade rescans every liquid US stock (~4,500 names) for this pattern after every close and returns the hits as a graded list, with the pattern drawn on each chart, so you review setups rather than hunt for them.
Join the waitlist to be invited when sign-ups reopen and see the current New Low Bounce list, or browse all 75 patterns.
New Low Bounce FAQ
What is a dead cat bounce?
A short-lived rally after a large decline that fails and resumes lower. Bulkowski documented it as a measurable pattern following event-driven drops.
How do you tell a dead cat bounce from a real bottom?
Reliably, you cannot tell at the time. The pattern describes a tendency after large declines, not a certainty, which is why the setup carries a structural invalidation level rather than a prediction.
What is a dead cat bounce?
A short-lived rally following a severe, usually news-driven decline, which fails and gives way to further weakness. The name is deliberately unsentimental: even something falling from a great height bounces a little.
How large is a typical dead cat bounce?
Commonly 10-30% of the preceding decline. A recovery of more than about half the drop has generally stopped being a dead cat bounce and become a genuine reversal, which is the level at which PatternGrade's grade collapses.
How do you tell a dead cat bounce from a real bottom?
Volume and structure rather than magnitude. A failing bounce comes on fading volume and stalls beneath the level the collapse broke through; a real bottom builds a base and reclaims that level. In real time the distinction is genuinely uncertain for a period, which is why the caveat matters.
Why do dead cat bounces happen at all?
Short covering, mechanical buying from oversold signals, bargain-hunting, and index or fund flows that have nothing to do with the news. None of these represent durable demand, which is why the rallies tend not to last.
Patterns a New Low Bounce is mistaken for
- Bear Flag
- A bear flag is a tight, orderly consolidation in any downtrend. A dead cat bounce follows a large event-driven collapse and is usually messier and sharper.
- Selling Climax
- A selling climax is read as a potential bottom. A dead cat bounce is read as the failing rally afterwards. They can describe consecutive phases of the same decline.
- Gap Fill Reversal
- That pattern looks for a retrace into an old gap holding as support. This one looks for a bounce failing beneath the gap the collapse created.
Last reviewed . Structure and grading for the New Low Bounce are reviewed against the scanner's own rules.