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Caterpillar Inc. (NYSE:CAT) stock news and links

Archive for the ‘Charts’ Category

Short-term challenge for Caterpillar’s stock

For those thinking Caterpillar screams “buy me” today, take a look at this chart of Cat’s trading range compared to the S&P 500 for the past 12 months:

Cat vs. S&P 500 trading channels

Note that since the bear marked kicked into high gear last summer, the S&P 500 has barely budged above the center of its RSI trading range. Meanwhile, Caterpillar is at the bottom of its RSI range today.

At some point the S&P 500 will rocket back to the top of its range and take everybody along for the ride. What strikes me as more likely in the short run, though, is that as the market digests more bad news, it grinds back toward the bottom of its range, making it highly difficult for individual shares to get much traction (especially ones where the immediate outlook is so bleak, like construction and machinery.)

Disclosure: I own no Cat shares.

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Tom Mangan posted at 10:29 am January 30th, 2009 |

Caterpillar’s chart: poised on the brink

Afraid to Trade blog profiled Caterpillar’s chart action yesterday.

In short, from a technical perspective on the daily chart, Caterpillar is finely balanced beween doom and hope at the moment, and it might be best to wait until a clear victor (buyers or sellers) emerges before entering a new position here. Although, this would be a decent spot to enter if you are a Caterpillar bull, because you could place your stop just beneath this level and would stand to make a good profit should price find support here.

Check out the link to see the whole thing .. the blog targets day traders, who tend to follow the charts more closely than folks who buy on fundamentals.

One observation: Cat is at the bottom of its trading range while the rest of the Dow and S&P500 are roughly near the middle. It stands to reason the broader markets will test the bottom of their range over the next few weeks as more ugly earnings reports unfold. That could spell downward gravity for everybody.

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Tom Mangan posted at 10:17 am January 27th, 2009 |

Quickie intro to charts

I’m no expert on charts or technical analysis (all I know I learned from Trader Mike) but I have picked up a few things over the years. Here’s the latest from Caterpillar:

Stock chart for Cat

About the indicators:

  • Stochastics show when a stock is “oversold” or “overbought.” Always remember a stock can stay oversold or overbought for far longer than you can stay solvent. Also: stocks can lose a huge chunk of their value going from the top to the bottom of this range, so saying “I’ll just buy when it’s at the bottom of the range and sell at the top” can be very costly because a stock that trades at 80 at the top of its range in October might be only at 60 at the top in November.
  • On-balance volume is a trend-follower’s friend. It’s reasonably safe to be long in a stock while the on-balance volume is positive.
  • Bollinger Bands narrow at trend changes. Whole books have been devoted to these bands; I just know some traders watch them like hawks.
  • Candlesticks offer clues on trend reversals. Long “tails” can point in the direction of the coming move. has an excellent Chart School to provide a grounding in what these and other indicators mean.

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Tom Mangan posted at 11:53 am January 8th, 2009 |

Interesting blog post for Caterpillar chart watchers

Corey Rosenbloom at MrSwing, a site for active traders, notes a conflict between Caterpillar’s daily charts and its weekly charts: The daily looks like Cat has found a comfortable support level, while the weekly shows it’s bumping against a major resistance level. Both can’t be true, he notes.

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Tom Mangan posted at 7:07 am January 7th, 2009 |

What about the buck?

The U.S. Dollar Index is in a free-fall, especially now that the Fed funds rate has been pushed to a nudge above zero. The chart is butt-ugly.

Reverting to the mean, big time.Source:

Reverting to the mean, big time.

Keep in mind there was a mad rush back into the dollar after the markets started crashing in September, so what’s really happening is the dollar is getting back to where it was last summer — though the fact that monetary policy is even looser than it was a few months back suggests even further declines.

A low buck is good for equipment Cat makes in the U.S. and ships overseas, but I suspect it’s less helpful for foreign-made machinery that stays beyond U.S. borders.

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Tom Mangan posted at 7:55 am December 17th, 2008 |

Not such a bad day after all

After an ugly opening, we had a nice rebound going into the close. Turns out the White House will rescue the Big Three even if the Senate won’t, via money in the $700 billion freed up to rescue the financials.

“Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms,” Dana Perino, Mr. Bush’s spokeswoman, said in a carefully nuanced statement released minutes before the financial markets opened in New York. “However, given the current weakened state of the U.S. economy, we will consider other options if necessary — including use of the TARP program — to prevent a collapse of troubled automakers.”

Shaking off bad news is characteristic of a market in rally mode — though I doubt we’d have seen much to smile about if the White House hadn’t ridden to the rescue.

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Tom Mangan posted at 12:22 pm December 12th, 2008 |

A Cat stock chart

They say all the ships at the bottom of the sea have charts, but anyway, here’s one filched from the good folks at

Three months o' carnage

Three months o' carnage

Yeah, it’s been a bit of a rough quarter, as they say. The Obama stimulus effect is starting to wear off, no doubt.

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Tom Mangan posted at 11:24 am December 11th, 2008 |