Since the beginning of September, Caterpillar shares have grown by more than 11% and are currently trading at the monthly maximum. Quotes are supported by positive news from China with the weakening of sanctions within the trade war, as well as the expectation of inflation growth, which positively affects the financial performance of industrial companies.
Caterpillar shares have declined by 0.70% over the past week. The S&P 500 index decreased by 0.08% for the same period.
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Long positions can be opened after the price consolidates above the level of 134.00. The closing of the profitable positions is possible at the levels of 138.00, 142.00 and 145.00. Stop loss will be located at 130.00.
Short positions can be opened after the price consolidates below the level of 129.00 with the targets at 122.00–118.00. Stop loss – 133.00.
Implementation period: 3 days.
Support and resistance
The issuer is moving within a stable uptrend. The price has renewed the local highs. The company’s shares are currently being consolidated. The key support and resistance levels are 129.00 and 134.00, respectively. There is potential for further growth. The signals of the indicators are ambiguous: the price has fixed above MA (200); the MACD histogram has started to decline. It is better to open the positions from the key levels.
A comparative analysis of the multiples of the company and competing companies in the industry indicates that #CAT is underpriced.
Resistance levels: 134.00, 137.00, 140.50.
Support levels: 129.00, 123.00, 119.00.
Caterpillar Inc. sells and manufactures construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. Its Construction Industries segment features asphalt pavers, compactors, cold planers, feller bunchers, harvesters, motor graders, pipelayers, street reclaimers, skidders, telehandlers, and utility vehicles; backhoe, knuckleboom, streamlined track, multi-terrain, skid steer, and track-type loaders; forestry and wheel excavators; and site preparation and track-type tractors. The organization’s Resource Industries segment provides electrical rope and hydraulic shovels, draglines, rotary drills, challenging stone vehicles, track-type tractors, mining trucks, longwall miners, wheel loaders, off-highway and articulated trucks, wheel tractor scrapers, wheel covers, landfill and soil compactors, machinery parts, electronics and management systems, pick work tools, along with hard rock continuous mining systems. Its Energy & Transportation segment provides lookup engine powered generator sets; reciprocating motors and integrated systems for the power generation, marine, oil, and gas businesses; turbines, centrifugal gas compressors, and related services; remanufactured reciprocating engines and elements; and diesel-electric locomotives and components, along with other rail-related products. The company’s Financial Products section provides operating and finance leases, installment sale contracts, working capital loans, and wholesale financing; and insurance and risk management solutions. Its All Other working segment manufactures filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and linking components; parts distribution; integrated logistics solutions and distribution services; and digital investments services. The business was formerly called Caterpillar Tractor Co. and changed its title into Caterpillar Inc. in 1986. The company was founded in 1925 and is headquartered in Deerfield, Illinois.
Robert Thomas has over 14 years experience in the investments on the institutional side of markets and has an “insider” view on the markets. In addition, he is an futures day trader that focuses on analyzing fundamentals, specifically earnings reports and technical levels. He has a Masters Degree in Business and Economics.