Dead-Cat Bounce by Industry

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This page shows how often dead-cat bounce event patterns occur in an industry. The fewer that occur, the better the industry is for traders and investors.

For example, suppose you are looking to invest in a new industry. Which one should you choose? You've found an appealing stock in oilfield services and another one in building materials. The below list tells you that the dead-cat bounce rate is 0.7912 for oilfield services and 11.9190 for building materials. Thus, the chance of owning a stock that declines between 15% and 70% in one session is 11.9190/0.7912 or 15 times higher in the building materials industry than it is in the oilfield services industry. All else being equal, you would invest or trade a stock from the oilfield services industry because it is safer.

Two industries tie for first place by having the fewest dead-cat bounces: homebuilding, and metals & mining (diversified). The worst performing (meaning the most dead-cat bounces), is the Internet industry.

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Top 10 industries

Worst 10 industries

Industries, alphabetical sort

Industries, performance sort

Methodology

Top 10 Industries

Homebuilding: 0.0000 (Tie for best)
Metals & Mining (Div.): 0.0000 (Tie for best)
Water Utility: 0.7013
Oilfield Svcs/Equipment: 0.7912
Petroleum (Producing): 0.8013
Insurance (Prop/Casualty): 1.2495
Chemical (Diversified): 1.5026
Petroleum (Integrated): 1.5291
Electric Utility (East): 1.5297
Food Processing: 1.6453

Worst 10 Industries

Air Transport: 8.9939
Human Resources: 9.3693
Medical Supplies: 10.5895
Computers & Peripherals: 11.2197
Semiconductor Cap Equip.: 11.2601
Drug: 11.5676
Building Materials: 11.9190
Retail (Special Lines): 13.8675
Semiconductor: 15.7000
Internet: 18.2355 (Worst)

Industries Sorted Alphabetically

21. Aerospace/Defense: 3.6109

35. Air Transport: 8.9939

32. Apparel: 7.0778

31. Biotechnology: 6.4798

41. Building Materials: 11.9190

24. Cement & Aggregates: 4.0106

16. Chemical (Basic): 2.2887

7. Chemical (Diversified): 1.5026

26. Chemical (Specialty): 4.8457

38. Computers & Peripherals: 11.2197

19. Diversified Co.: 2.5543

40. Drug: 11.5676

18. Electric Utility (Central): 2.5510

9. Electric Utility (East): 1.5297

12. Electric Utility (West): 1.8704

10. Food Processing: 1.6453

11. Furn/Home Furnishings: 1.8129

1. Homebuilding: 0.0000

15. Household Products: 2.1070

36. Human Resources: 9.3693

28. Insurance (Diversified): 5.9880

14. Insurance (Life): 2.0966

6. Insurance (Prop/Casualty): 1.2495

44. Internet: 18.2355

27. Machinery: 4.9885

37. Medical Supplies: 10.5895

30. Metal Fabricating: 6.4216

1. Metals & Mining (Div.): 0.0000

23. Natural Gas (Distributor): 4.0077

5. Natural Gas (Diversified): 0.8019

3. Oilfield Svcs/Equipment: 0.7912

25. Packaging & Container: 4.3755

8. Petroleum (Integrated): 1.5291

4. Petroleum (Producing): 0.8013

34. Precision Instrument: 8.1670

42. Retail (Special Lines): 13.8675

20. Retail Building Supply: 2.7027

22. Retail Store: 3.8867

13. Securities Brokerage: 2.0416

39. Semiconductor Cap Equip.: 11.2601

43. Semiconductor: 15.7000

29. Shoe: 6.3247

33. Toiletries/Cosmetics: 7.4752

17. Trucking/Transp. Leasing: 2.4156

2. Water Utility: 0.7013

Industries Sorted by Performance

Homebuilding: 0.0000 (Tied for best)
Metals & Mining (Div.): 0.0000 (Tied for best)
Water Utility: 0.7013
Oilfield Svcs/Equipment: 0.7912
Petroleum (Producing): 0.8013
Natural Gas (Diversified): 0.8019
Insurance (Prop/Casualty): 1.2495
Chemical (Diversified): 1.5026
Petroleum (Integrated): 1.5291
Electric Utility (East): 1.5297
Food Processing: 1.6453
Furn/Home Furnishings: 1.8129
Electric Utility (West): 1.8704
Securities Brokerage: 2.0416
Insurance (Life): 2.0966
Household Products: 2.1070
Chemical (Basic): 2.2887
Trucking/Transp. Leasing: 2.4156
Electric Utility (Central): 2.5510
Diversified Co.: 2.5543
Retail Building Supply: 2.7027
Aerospace/Defense: 3.6109
Retail Store: 3.8867
Natural Gas (Distributor): 4.0077
Cement & Aggregates: 4.0106
Packaging & Container: 4.3755
Chemical (Specialty): 4.8457
Machinery: 4.9885
Insurance (Diversified): 5.9880
Shoe: 6.3247
Metal Fabricating: 6.4216
Biotechnology: 6.4798
Apparel: 7.0778
Toiletries/Cosmetics: 7.4752
Precision Instrument: 8.1670
Air Transport: 8.9939
Human Resources: 9.3693
Medical Supplies: 10.5895
Computers & Peripherals: 11.2197
Semiconductor Cap Equip.: 11.2601
Drug: 11.5676
Building Materials: 11.9190
Retail (Special Lines): 13.8675
Semiconductor: 15.7000
Internet: 18.2355 (Worst)

Methodology

I looked through 466 stocks in 45 industries from 1/1/2000 to 2/8/2007 (encompassing both a bull and bear market). All industries contained at least 5 stocks with the average of 10 stocks per industry. I located all dead-cat bounce event patterns where price dropped at least 15% in one session and then sorted the results by industry. After that, I added the number of dead-cat bounces and divided the result by the sum of the number of days searched for the stocks in the industry (some stocks became public after 1/1/2000, so the periods varied). I multiplied the result by 10,000 to slide the decimal over and give a raw score, which the above list shows.

For example, the 12 stocks in the apparel industry had 15 dead-cat bounce event patterns appear in 21,193 days of daily price data, for a raw score of 7.0778 or 10,000 x 15/21,193.

Two industries did not have any dead-cat bounce event patterns appear during the period studied: homebuilding and metals & mining (diversified). This does not mean that the industry is free of dead-cat bounce event patterns. It just means that I did not find any.