falling knife
n. A stock or similar security with a price that is undergoing a steep or long-term decline.

Example Citations:
Let’s look at Oak Brook-based McDonald’s Corp. (MCD). The stock closed Friday at $ 33.38 a share, up $ 1.38 on the week, but far off its 52-week peak at $ 49.56, touched last November. A falling knife.
—Mitchell Zacks, “When a stock’s price falls, those selling may be right,” Chicago Sun-Times, August 6, 2000

We had a relative strength shift that actually occurred in early March. However, we had record Nasdaq volume on April 4, the day that we slid 13 percent intra-day and then recovered. Also, these extreme volatility readings tend to coincide with a bottoming formation. That being said, it is a falling knife. We’re going to have to look for some confirmation before we can say we’ve absolutely seen a low.
—Deborah Marchini and David Haffenreffer, “Gabriel: Wall Street Setting Up for ‘Very Strong Summer’,” CNN, April 14, 2000

Earliest Citation:
Ms. Cohen said she was loading up on securities that have weekly floating rates and shunning long-term bonds until prices stabilize. She compared trading in the currently volatile market to “catching a falling knife. If you’re lucky, you’ll catch the handle. If you’re not, you’ll cut your hand.”
—Patricia Lamiell, “Prices Fall 1 1/2 Points on Fears About Inflation and the Dollar,” The Bond Buyer, September 28, 1987

Notes:
The term falling knife comes from an old Wall Street adage: "Never try to catch a falling knife." It means that it's both dangerous and foolhardy to buy a stock that's falling because chances are it's falling for a reason and will likely continue to do so. This maxim has now become so ingrained (it goes back in print to at least 1987), that we're starting to see references to just falling knife, without the rest of the saying.

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