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After stocks had their worst day since the 2008 financial crisis, they rallied back hard Tuesday. In fact, the Dow's 1,100-point gain was its third largest daily point gain ever, behind only two days last week.
If you think the market is volatile, you're right.
The question investors have now is whether that was the end of the correction or just a "dead cat bounce."
Before we answer that, let's first talk about what a dead cat bounce is. This is a short-lived rebound in the market after a lot of losses, so named because supposedly even a dead cat will bounce when dropped from a high enough place.
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In other words, it's a false hope before markets fall even more. There will always be short-term scalpers around to buy beaten-down stocks and sell out after only a quick rebound.
And some of the largest dead cat bounces occur in the midst of a bear market.
To find out whether stocks are ready to rally again or Tuesday's gain was just a short-lived rebound, we're looking at three indicators…