All right everyone. So in today's episode, we are going to talk about the Dead Cat Bounce. Now this little guy's name is Rambo. He's got nine lives, so he's taken some hard falls, but he always keeps going.

So what is the Dead Cat Bounce? Well, we have a picture-perfect example of it today. Uh, today was a great day. I'm sitting at Uh, twelve thousand, Nine hundred, Ninety eight dollars, and forty four cents. And the bulk of that profit? Ninety percent of it.

Uh, eleven thousand was on Meg L. and this was a Dead Cat Bounce which was on the watch list. I actually put it on the watch list yesterday as something we wanted to watch for a possible dead cat bounce. So what is the Dead Cat Bounce? Well, essentially on this stock.

We had a move on the ipo from 49 a share all the way up to 250 bucks and then all the way back down here to a low of I think the low was pre-market It was a little below eight dollars. So the whole idea with the dead Cat bounce is something drops so fast that because it's so extreme, it snaps and bounces back off the low. So if we actually zoomed in here, what you would see is that when Rambo falls from a tree, he's diving and avoiding a you know, a missile. He lands on his feet and then springs back up just a little bit.

He's so limber like that. So this little bounce here. now you want to get real zoomed in. That's the bounce.

So it's a hard fall. and oh right, back up like that. Now it's not a big bounce. We never expect this to go back to the highs.

Never. This is just a bounce off the low. That's all it is. But that's a strong pattern for a day trade.

and I mean you could even swing trade it. But I really focused on this as a as a day trading pattern. Okay, so um, and I see, uh, by the way, Chris posting his P L there. Um, Chris.

Twenty One thousand, Five hundred, Forty Three dollars. Impressive. Very good. So the student, uh, excelling and beating the teacher today, I'm happy.

That's great. Great to see. Okay, so Meg L. we can dive into the reasons and why the stock fell and to a certain extent it matters.

Um, but on the other hand, this is a very technical setup. You have a really quick fall and then you have the spring back up off the low. So you know the whole idea with this one is that we've seen in the last few weeks these crazy ipos where stock ipos and goes way way up and then comes all the way back down and we had it on. Ilag Ilag and this one sold off it.

ipod went up to 26 a share, sold off really hard and then this gave us a dead cat bounce on this candle right here. So on that day we traded it for dead cat bounce and the setup is the first daily candle to go green after that really strong sell-off and then I'll show you the intraday entry. Now this ended up giving some additional bounces on this day here and a little bit on these two days here, which as it was curling back up, it still has a lot of potential for a move higher. You know, the high.

This candle was 438, the height of this candle here was 578, you know. And then you start to get into this big red candle. So on the daily chart we would sort of say well, this doesn't really have a lot of resistance. Um, you know, on this particular day, back up to like 2640.

But what's the reason? What's the fundamental reason that's going to allow it to do more than just the bounce off the low and actually put in a big move? There's probably some statistics on, um, these types of sell-offs in terms of like, really big sell-off and then first daily camera come up. How much you should expect for a dead cap bounce off the low some people might use like a Fibonacci retracement or something like that for me. Generally what I was thinking today is that this had the potential to go up 100 percent off of this price here. That's what I said.

I said. I think this Eq easily has the potential to go up 100 and that was when it was at eight dollars. So let's check the high intraday on um on Meg L. and you'll see that the high intraday uh today is 1787.

so we exceeded a 100 intraday bounce. Now this is one where you you might have it on watch for a couple of days which I did. So last week we had the day where it dropped from 249 to 86. and I was like okay and I saw some people talking about a bounce.

I was like yeah you could But the problem on this stock was that the ipo price. The stock ipos. Uh well it. So this is a little confusing.

You see the open is 50. But when the company sold shares and I want to say they sold like five million shares or something like that, Four million shares at like five dollars a share. They raised like 20 million dollars. So they sold their shares.

The ipo price was like four or five dollars a share. It was very low. So that's the price the company got for selling shares. and then by the time the stock actually opens, it was so hyped up that traders were already willing to pay 50 a share for it, which was pretty irrational.

It ends up going up high and then selling off. So I was kind of like let's wait for it to come down a little closer to its ipo price because I think even at this level it's um, it's still too high. So uh, just for reference, there's a Nasdaq ipo calendar that you could look at if you're if you're particularly interested. But uh, let's see.

so Meg L ipod At four dollars, it was Five million shares. Which means the company raised 20 million dollars and they must feel so silly. Uh, disappointed in a way because they sold five million shares at four dollars a share only to watch the stock go all the way to 250.? I mean, think about that. That's that's kind of insane.

Um, how much money they left on the table? But you know, at the time they had no way of knowing how hyped up it would be and this sometimes happens. So anyways, uh, I was kind of looking for it to come back down closer to that five dollar level and that's more similar to where we got the bounce on Ilag and where we've had the bounce on some of these others. Uh, Hkd right now is another one that is coming back down and although you did get a little bounce already on it, it still has a lot of room to keep coming down. It went way crazy high.

Okay, so let's look at Meg L. All right. So on this one. Um, so for the last few days I've had it on the watch list because I it was a stock.

They had made a big move recently so I keep these on my watch list and I said okay, well uh. after we had that really small red day here, I actually thought we might have a bounce on it. And on that day this had a low of 10 and a high of 14 20. And I was watching it for a possible dead cat bounce and I might have even traded it that day.

I can't quite remember now. I did trade it one of these days in this area. So let's look back at the chart. All right.

So the chart for the first day. So this this was the day where we had this crazy sell-off. You know, these were the two days of crazy sell if we're looking at the one minute chart. So this thing is just selling off really hard.

And then here we started to get dialed in because I started to think that it looked like it was basing out um, around this level. So we actually did trade it. Um, on this day, right in here. this is where you were starting to get some dead cat bounce opportunities.

This was after hours, so you had this strong sell-off It sort of double bottomed at around 12 and then there was a little bit of resistance here at about 13.. And so this was a break of this channel right here. and that gave you a move from 13 up to 15, a little pullback, and a nice bounce up to 17.. so that right, there is a dead cat bounce that was after the big sell-off and that's a nice bounce.

I mean, listen, from 12 up to 17 a share, that's five points. That's a great bounce. You can't complain about that. So after hours closes, um, eight o'clock right and then the next morning at 4am, it pops up a little bit pre-market It sells off a bit more.

and then I took this trade the next day as it broke through volume weighted average price. This was a breakthrough. It broke through 13.50 and we got to squeeze on this up to about um, 16.31 So it's about three dollars a share. not bad.

And the level I was watching here. I was saying, you know what? we're looking at this as being support off of about 12 because it's held that level and I want to see if it can break through after hours high there of like 17. you know what? It wasn't able to do it. It sold off a little bit more, but not a lot more.

It still held right around 12. Okay, so then the next day we got another little opportunity on in this area. I don't remember if I traded this, but it kind of broke out a little above 12, came back down, didn't wasn't really quite ready to go. All right, but still on watch, still keeping it on watch, and then here we go.

So then we've got this pull back on Friday. So that was um, yesterday. Well, obviously not yesterday, but that was the last trading day it pulls back down hits a low of about 7 80. Now this morning, this is really interesting.

I had it on watch um last night when I did my Sunday night game plan for the week ahead and I said, you know it's on watch for first daily candle to make a new high So that means we're watching it at this point potentially over yesterday's high Friday's high which was 10 30 the first candle to go green. Now then we have 11.97 and then we have 14 20. And if we break over 1420, I mean this thing could bounce to 20 a share. So realistically, I think it has the potential to bounce up about a hundred percent if it when it bounces and I don't know when it's going to happen, I'm just gonna keep it on watch.

So this morning I sat down and looked at it pretty early and when I looked at it in this area, you know what I noticed on the level two, It pops up here and I was like okay, that's a nice pop And then I noticed on the level two, a forty five thousand share seller. And I thought a forty five thousand share seller. That's a pretty big sell order for this stock considering there wasn't a lot of volume. Who's already putting out a 45 000 a share sell order? I mean, the fact is, it didn't really make a lot of sense to me because that sell order is all of you know.

87. No, let's see, the low was 760. the sell order is like 60 cents off the lows. So who's selling 45 000 shares? 60 cents off the lows? I mean, at a certain point, if you're really holding that kind of big position, you might as well keep holding it.

I don't know. I mean, why sell it there? Um, if you're selling to go short, you already missed the huge move down. So why are you going short at that level? So I don't really understand it, but I saw it and I was like, well, in any case, there's a big seller on the level too. So while I like and this is very important because I like the daily chart, the daily chart's great, but I don't know when it's going to start bouncing.

Maybe it's today, Maybe it's tomorrow, because I've been watching it for three days. So daily charts? Good. Okay, intraday chart. On the five minute it looks good.

It looks like it bottomed out and now it's starting to curl back up. But now, my final decision before taking the trade, I'm looking at the level two and when I pull up the level two window and I see that seller there at 820 45 000 shares, I'm thinking, well, wait a second, you know Now sort of my final, um, you know my final review. Before I can press that buy button isn't passing. There's a big seller blocking the way and this to me is why it is really important.

of course to use level two in your trading because if you don't, you could be end up buying right into a huge wall that doesn't break. So in this case I said you know it's on watch, let's put it on a side chart. It's still a dead cat bounce setup but I don't know when it's gonna go so it's just a maybe. So in the meantime I took some other trades ampg.

we had breaking news on that, V traded that one. um whatever. So I took a couple other trades and then I I still had the level two up and all of a sudden I look over and we can look at the one minute chart here. All of a sudden I look over and um I see it's at uh the the seller broke and it's at like whatever it was.

Um, 8 30 on the level two. So someone bought 45 000 shares. Basic. Basically that's what happened.

Someone pressed the buy button for you know, a big big order 45 000 shares. So you see there's a volume spike there 40 000 shares as that buy order was bought up and then the stock breaks that price. So because I already had it on watch, I pressed the buy button pretty much immediately and I bought 1 000 shares at 8 38. That was my best entry.

Eight dollars and 38 cents. That's not bad. That's about 18 cents. Uh, a bit of a little bit of a chase 18 cent chase versus the break of uh, 820, but you know that's fine.

I end up adding at adding at 860 and I said I'm going to add on 875 885 for the move up to nine and I'm not going to sell it until we get the break at Nine. So I didn't sell any of it until we got this break of nine. So we get this squeeze up to nine dollars. and I said my first target on this for the dead cat bound setup is ten dollars and thirty cents.

Now it doesn't mean I'm not going to take profit along the way, but this stock has to break 10 30. Otherwise, when it opens, it's not necessarily going to be making a new high and we need it not just to be green, but to be making a new high. And so this ends up um, having a very nice move here. hits a high of 925, does a proper one minute pullback right here, then goes up to 950 up to 980 up to 10..

micro pullback hits a high of 10.08 market opens and this thing pops up. As you can see here, we end up squeezing to a high of 10 19.. So we do move a little bit higher, but at the open a little choppy we end up actually going red. We sell off here.

Um, I don't think it halted down. No, it just sold off a little bit and so at that moment this was sort of the moment of truth. We were below the 10 30 trigger on the daily to create confirmation of first candle to make a new high. and because the open of the day was at 9 79 and we were down here at 9 25, the candle was red.

so remember you can have a gap up. but the candle's red. Because we as traders we color the candle versus the open price. so it pulls back here and then whoa.

There we go. break a V whap, squeeze up through 11 and now it's game time. We got the move on this and so now we've got daily confirmation. All right, our first daily candle is made in new high that was at 10 30.

we now have room to 1197 the height of this candle. If we break 1197, we've got room to 1420 the height of this candle. If we break 1420, we've just got a lot of room so no real resistance. We could keep going and this is where you see that.

We just continued to go higher and I traded it through this whole range I was getting in getting out buying breakouts. We had a ton of really great setups. I did a ton of dip trades. We had some really nice dip opportunities where it would dip down to the half dollar bounce, back up to the next whole dollar.

Just really clean action. Another dip off the half dollar pop back up to 11.50 This one really respected. half dollars in whole dollars. At the end of this recap, I'll give you a link to this indicator here that I'm using right now to help me avoid false breakouts.

We had a couple. There was a false breakout right there as you can see. it then comes back up and rips through the high 1150 and this thing is just super strong. Front side of the move.

Clean five minute chart. We're looking at the one minute, but the five minute chart was super clean and it just kept going. So this was a very nice dead cat bounce. They're not always this clean.

This was a particularly clean one and so I traded it. Well, I'm happy with how how we did on it and I think that we should keep this pattern. This is just a great example of the pattern and we should keep it on a close watch. Obviously I'll grab screenshots of this and add it to the chapter dedicated to dead Cat bounces.

that's part of the Uh Warrior Pro curriculum. This isn't Of course, the first time, I'm sure you've ever heard me mention Dead Cat Bounce. It's A it's a pattern that we've traded for a long time active day traders the collective Wii so 1541. Then it breaks that level, squeezes up to a high tops out there on a topping tail at 17.87 Then we get a sharp pullback below the 20 moving average, starts to look like a head and shoulders pattern and ends up coming back up here for a second off of this ascending support line before breaking down.

so you know this is where it sits right now. I am very happy with where I sit on the day. I don't want to overstay my welcome. I got green.

I'm at twice the daily goal over twice, The daily goal and one of the things I mentioned earlier today are actually. I mentioned it yesterday when I was talking about the game plan in terms of psychology. One of the things that I was really thinking closely about was it's the beginning of the week. Today's Monday.

I want to start the week in the green. So first trade has to be high probability a trade a setup that I think looks really good and try to get 20 30 cents a share. The reality is 20 cents a share per share per day. That is the difference between success and failure as a trader.

If you can get 20 cents a day consistently, you're green. If you can't, I mean it is. you could get 10 cents, you get 30.. But it comes down to such a small margin and it's so easy for traders to lose sight of this.

Um, and you know, look, 10 cents a day is fine. Uh, 20 cents? It doesn't really matter, it's just the whole point is keeping keeping kind of perspective here that what you're looking for is a couple of base hits. And so I start the day looking for one good quality trade. A trade that I think has the potential to give 30 40 50 cents per share.

And if it ends up working then maybe I'll capture half of that because you never capture the whole thing. If it doesn't work, I should still at least have some room to get five to ten cents a small base hit and hopefully I can avoid a loss. Or if it does turn into a loss, it's a really small loss. So the first goal of the day is finding that one trade that I have high conviction that I can get 20 to 30 cents a share out of.

Uh, today the dead cat bounce was the pattern that gave us the most the most room and it gave us a ton of really good setups on the one minute and the five-minute chart. So just clean action today. some good good trading and I hope this is helpful for people that are, um, curious about the dead cat bounce pattern because it's a pattern that you will continue to see in the market after you see these really extreme moves. We trade the moves up Uh, or sometimes you miss the move up and if you do, you can trade the move down to the short side and then you could trade the bounce off the low back to the long side.

so you could trade these both long and short. There's a lot of opportunity here and I hope this episode has been helpful so I'll put a couple links to Um to other videos right here and right here that I think folks watching this as a recap might enjoy. So check those.