Caterpillar Inc: The CAT is crawling, is it going into a cocoon

NYSE:CAT   Caterpillar, Inc.
Hi Guys,
Today I would like to post about the CAT from a Point and Figure chartists perspective. The data used is Daily OHLC data from July, 2016 to 6th August,2018.

The charts used in the post are Daily 2% X 3 and Daily 1% x3 Close only charts. Both the charts are constructed on the same data set as mentioned above.

As the data is 2 years data and the CAT, more than doubled from the price levels of July, 2016 I am posting zoom in and zoom out chart images for better clarity and understanding.

Let us have a look at the Daily 2% X 3 Close only chart. (Zoom out)

The stock is trading above the long term Bullish support line (the green dashed line) marked with green Arrow on the chart. The bearish resistance line from January,2018 high is marked as on the top left hand corner of the chart. The bearish support line(Blue dashed line) is marked with brown Arrow. The highest closing level is marked with Horizontal red dashed line and the recent double top resistance level at 156.38 is marked with solid orange colored line. The break out level is marked with Arrow on the chart@ 159.57. The Point and Figure vertical count down side target 111 is marked with Arrow on the chart.

On this chart the long term trend is intact as the CAT is trading above but the stock is on a SELL signal, a triple bottom sell signal which can be a trend reversal Point and figure signal. The stock will generate a BUY signal(@159.57) if it closes above double top resistance at . The down side vertical count is at 111. Please note that the pnf counts may or may not be fulfilled and the is negated if the CAT generates BUY as discussed above.

Now let us have a look at the Daily 1% X 3 Close only chart (Zoom out).

Let us have a look at the Daily 1% X 3 Close only (Zoom in) chart and conclude the discussion.

The long term Bullish support line marked with Arrow , invalidated bearish resistance line is marked as at the top left corner of the chart, the adjusted bearish resistance line is marked with Arrow, the bearish support line is marked as blue dashed line on the chart. The price point 133.22 is marked as , the price range 134.56 to 142.93 between the black and solid Horizontal maroon colored line is marked with and the double top resistance break @ 159.63 is marked with .

The stock is trading above the so technically the trend is Up and intact on this chart also. But the last signal is Triple bottom break down signal (below the black horizontal line at 142.93). After generating the triple bottom sell signal the stock tested bearish support at 134.56 above the solid maroon colored Horizontal line and rebounded back to retest the triple bottom break down level.
Then bears pushed the price down into ‘O’ column. If the bears succeed in pushing the price further down to below on a Daily closing basis, then the formation is called Bearish catapult which may accelerate the fall and may be in due course of time the stock may test in that case.

Please note that all the levels discussed above are on Daily closing basis levels.

So to conclude, if the CAT moves in the zone it will crawl (which is the current status), if it goes below it may go into a cocoon and if it breaks above it will emerge with flying colors like a Butterfly.


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