Rhythmic

CAT Short - Caterpillar, Inc. - The Double Top Drop

Short
NYSE:CAT   Caterpillar, Inc
NYSE:CAT Short - Caterpillar, Inc. - The Double Top Drop

This short biased thesis is based on the following factors:
  • A double top that was recently formed and confirmed
  • A Bearish Three Black Crows candle stick pattern followed the second top (of the double top )
  • A large series of dark pool prints totaling around $882M came in on June 25th, all around the $216.31 price level. Although we do not know the nature of this trade, we are currently trading under this level and continued downside price action will further increased the probability that this trade was a sell.

Possible Threats:
  • The $212.62 fib defined level may show support where price action may struggle or bounce from.
  • Short term tactical sentiment for XLI is starting to recover from a bearish downtrend and may show upward momentum from here that could lift CAT up enough to hit the Stop Loss.
  • That nature of the large dark pool trades are unknown and can only be inferred.

The June 29 Bar is being used to define the following trade parameters:
  • Short Entry: $214.58
  • Stop Loss: $218.71

Possible Targets:
  • $207 - First meaningful fib level
  • $200.17 - A previous trend high that was used as a fib definition point
  • $197 - Based on a fib level that has show to have acted as reasonable resistance and support
  • $190 - Based on the rounding to a whole number on the closest fib level
  • Other targets can be based on the fib levels show in the chart or by drawing support lines

This thesis/idea is just my opinion based on the information discussed within. None of it should be looked as a recommendation or as financial advice.


NYSE:CAT Daily Chart

NYSE:CAT Weekly Chart