bear trap

Bear Trap

A false signal that the rising trend of a stock or index has reversed when it has not.

Investopedia Commentary

This can occur during a bear market reversal when short sellers believe the markets will sink back to its declining ways. If the market continues to rise, the shorters get trapped and are forced to cover their position at higher prices.

Related Links

Short Selling Tutorial
The Short And Distort - Stock Manipulation In A Bear Market

See also: Bear Market, Bear Raid, Dead Cat Bounce, Short, Short Covering, Short Interest, Short Selling, Short Squeeze, Technical Analysis

bear trap

An accumulation of shares being sold short by bears trying to drive down the price of a stock. The bear trap occurs when the bears find they must repurchase the shares from an individual or a group at an artificial price determined by the seller.