Caterpillar Is Oversold

NYSE:CAT   Caterpillar, Inc
Caterpillar was one of the favorite value / cyclical plays coming out of 2020’s mini-depression. Now, the Dow Jones Industrial Average member just had its biggest pullback in a long time.

This chart highlights the deeply oversold condition on stochastics, which fell on Monday to their lowest level in over a year. CAT also just had its worst week (-9.6%) since the depths of the coronavirus crash in March 2020:

The main catalyst for the selloff appears to be the failure of a high-dollar bipartisan infrastructure bill in Congress. However, there were signs of trouble on the chart – especially the bearish divergence on MACD .

However now that a liquidation has occurred, bulls may like the chart. Aside from the oversold stochastics, CAT is holding the March 2021 low around $216. Will this level become support again?

Given the sharpness of the drop and the high volume , it may still be early in the process to jump into CAT. However, it remains one of the most important cyclicals / industrials in the market. Potential buyers may start getting interested – especially with a new quarter getting close.

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