After a rough year in the public markets, you might take today’s brilliant trading as good news. Any positive price movement is a win, right? Kinda.
The tech-heavy Nasdaq Composite index rose 3.4% today, while other major U.S. indices jumped smaller amounts in a hall-of-fame start to the trading week. (That the markets are turning up for Disrupt is rather kind, I must admit.) Even more important to the tech industry, however, is sector-specific news.
- Software/cloud companies: As measured by the Bessemer Cloud Index, shares of these companies are up 5.8% today.
- Fintech: As measured by the ARK Fintech Innovation ETF, shares of these companies rose 7.4% today.
Good news? Sure, but only if you are into squashy cats.
Let me explain. When the value of a particular commodity or security falls sharply, it often follows up its declines by bouncing back a little. If the underlying forces that drove the security negative remain in place, such rebounds often prove short-lived, and not indicative of the actual “bottom” of any particular trading range. This is often called, somewhat inartfully, a “dead cat bounce,” or more specifically, the sort of modest rebound that a cat’s corpse might manage if it hit concrete after falling from a high window.
Don’t let today’s software rally improve your mood by Alex Wilhelm originally published on TechCrunch