timwest

CAT is lagging IR in the past year

BATS:CAT   CATERPILLAR INC DEL
237 0 0
Heavy equipment maker IR (Ingersoll-Rand) has been outpacing CAT in the past year. The recent setback in CAT wasn't matched by a drop in the shares of IR and a spread has opened up in the performance of these two securities.

I have played the short side of CAT and IR off and on for the past few months, but this way of setting up a trade between these two securities seems to make a lot of sense to me.

The low volume bounce in IR ought to be confirming the weak rally in IR shares.

Risk: 3% between the two.
Reward: 10%
Time frame: Estimate 10-15 days

Cheers.

Technical TIm, Tuesday May 29, 2012 4:16PM EST
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