BrokenTypewriter

Dead CAT bounce opportunity?

NYSE:CAT   Caterpillar, Inc
CAT is in an obvious bear market and should head lower after breaking below the 100SMA. So it will continue to head lower. I believe this is was a sell the rumor on the Biden Infrastructure plan to shake out investors who jumped in.
I'm targeting the Fib retracement level at 209.12 for a buying opportunity. There is also support from the 150SMA on the daily. Indicators on the daily currently are going into oversold conditions and will watch for RSI bullish divergence . I'm looking at this as an ABC corrective wave with the rebound taking it back to 234. Could be a good swing trade.
A break below the 150 SMA would retrace it down to the 200SMA or the 2nd FIb retracement level at around 186.
Comment: We should start to see some choppiness in price as it gets closer to the fib level and the trendline. I'm anticipating price to bounce within a channel between 220, 211 and ultimately 209. I'm looking for lower highs and lower lows this week with bullish RSI divergence which would signal a reversal coming. Fed will talk this week, so be aware that the markets could be volatile. Usually the algos try to knock out stop losses before reversing, so price might dip below the trendline.
Comment: CAT is rebounding nicely. Industrial sector seem to be recovering. If you're playing this as a swing trade, the first major resistance level is ~227-228 and the 2nd would be the 50SMA. I'll just hold on to this long and see if it can recover to the ATH, but move my stop losses up as it gets closer to those resistance levels. I think this gets impacted if major news comes out like the infrastructure plan fails.

Comments

I put a 1/3 order ~209. The Dow Jones looks like it could go down a little further. So it could go down to the 200MA or the 2nd fib level
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