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Cem Karsan Explains What a Dead Cat Bounce Actually Is
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ticker lesson
Breakdown
0:00lesson
Event-driven volatility patterns
- Events cause high skew and volatility
- Volatility decreases post-event
- Short gamma activated by down moves
- Puts decay, dealers buy back stock
- Classic flows-based market move
1:56lesson
Momentum fade and dead cat bounce
- Flows fade at 20-day moving average
- Negative news with positive flows = dead cat bounce
- Sell into weakness, avoid buying on rebounds
- Fridays are momentum days, avoid reversals
- Crashes often occur Friday to Monday
3:43lesson
Macro weakness and market overhang
- Negative macro, administration not supporting market
- Besson quiet, flows fading by December
- Counter-trend moves expected as flows fade
- Potential for market collapse before December
- Sell-off from 2:30 to 3:00 p.m. is an alarm
5:26ES· ticker
ES - sell-off in tech and semis
- Tech down 20% over 5 days
- Semis down 26% over 20 days
- Tech down 18% over 20 days
- Anthropic IPO reevaluation
- Funds potentially blowing out
7:21lesson
Dispersion and market stress
- Index fall compressed, dispersion growing
- Rotations between sectors cause stress
- Dispersion can break index fall
- Slow decline with stair-step pattern
- Similar to 2000 market decline
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