CAT is back for a trade

Can you give an opinion of CAT on the NYSE?

Thanks
PS: I appreciate your radio good humour

D.

 

Hi D.,

Caterpillar Inc.  ( CAT NYSE) is the name behind all the heavy equipment you see working on building, mining, and industrial sites. If you have young boys in your family you will know that  some CAT gear is featured on  the TV series ” Mighty Machines”.

CAT had a great run from the lows but at this point the uptrend is broken and a the decision to chase it needs some serious thought.

The three year chart provides a view of the uptrend that started in March of 2009 and met resistance at $65.00. If you draw a horizontal line across the chart at $65.00 you can see that this level used to provide support and now provides resistance.

The six month chart indicates that there could be an opportunity to catch a ride on a stock that has made a turn from the sell off that started in January 2010 where CAT fell from close to $65.00 to almost $50.00. The MACD has turned up and the RSI also signalled reversal of the selling trend. The price action also shows that CAT is now trading above the 50 day moving average.

Another factor that comes into play at this time of the year is the build up to the summer construction season when contracts are assigned. CAT looks to be in a good place for a trade from these levels to $65 which would generate a double digit return.

Happy Capitalism!