Caterpillar was one of the first big cyclicals to rally back from 2020’s crash. But it’s been showing signs of fatigue more recently.
The first pattern on today’s chart is the lower high versus June. The broader S&P 500 and Dow Jones Industrial Average made new highs in early January, but CAT has gone more than six months without the same feat.
Second is the high-volume bearish gap on January 28. Its 5 percent drop that session was the biggest one-day decline in over a year.
Third, the selloff planted its shares under both the 50- and 200-day simple moving averages (SMAs). They have stayed there since. It’s also noteworthy that the 50-day SMA has remained under the 200-day SMA since late in the third quarter.
CAT has tried to hold a trend line that began in September following the recent plunge. Traders may now watch this pattern as key support, with the potential for more selling if it breaks.
There was also a bearish outside week as the stock peaked in mid-January:
Finally, the fundamental backdrop may be less supportive after CAT warned of costs pressuring margins last quarter.
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com/important-information.
The first pattern on today’s chart is the lower high versus June. The broader S&P 500 and Dow Jones Industrial Average made new highs in early January, but CAT has gone more than six months without the same feat.
Second is the high-volume bearish gap on January 28. Its 5 percent drop that session was the biggest one-day decline in over a year.
Third, the selloff planted its shares under both the 50- and 200-day simple moving averages (SMAs). They have stayed there since. It’s also noteworthy that the 50-day SMA has remained under the 200-day SMA since late in the third quarter.
CAT has tried to hold a trend line that began in September following the recent plunge. Traders may now watch this pattern as key support, with the potential for more selling if it breaks.
There was also a bearish outside week as the stock peaked in mid-January:
Finally, the fundamental backdrop may be less supportive after CAT warned of costs pressuring margins last quarter.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com/important-information.
