A sweeping red start setup for the opening bell here today. The scans and reviews of charts have been intriguing lately, as both groups are seeing a good number of charts.
The last week or so, we haven't been skewed heavily towards either the bearish side or the bullish side. There's a good chance that this happens today.
One sector looking awful here is the Farm and Construction machinery sector. Three names top the bearish list for me: Deere (DE), Caterpillar (CAT) and Terex (TEX). While the three charts do look similar, there are some subtle differences worth noting.
Caterpillar may be the strongest here in terms of the technical setup, although Deere wins the price war at the moment. CAT has a stronger Relative Strength Index (RSI), along with a nice series of higher lows in the Accumulation/Distribution line.
The Chaikan Money Flow (CMF) has even managed to get green, although I anticipate that will reverse today. The same can be said for the Slow Stochastics. The SlowK and SlowD still sit under 50 though, so the attempted reversal has lost steam.
Unfortunately, I think we'll lose price support this morning which should force a test of the Aug. 24th low. I still give these lows very little weight though, based on the action from the day and the appearance very few, if any, traders were able to actually exchange shares at those low levels.
Deere has a little better price setup than CAT or TEX, but don't get me wrong, it's just the best looking dump on the block. In the end, it's still a dump. Again, price support looks like it will break this morning and we'll be set to test the Aug. 24 lows.
Deere's price, should it bounce, has less resistance points than CAT, but unfortunately the RSI is weaker here, the CMF is still red and the accumulation/distribution line is set to make new lows, possibly ahead of price.
Terex saw that big pop in early August on its merger-of-equals announcement. The deal is stock for stock, so the technicals still fully apply here. The drop in price has been sharp, and we are set to open below any support.
The accumulation/distribution line has made new lows in front of price, while the RSI should see a new low today.
The one positive is we'll be oversold on the RSI and Slow Stochastics, but those won't mean anything until those indicators leave oversold territory. Until that occurs, I would expect heavy and consistent selling pressure on Terex.
I'm looking for $74-75 on Deere, $67-68 for CAT and $16.50-$17.00 on TEX before I believe we'll start a basing pattern.