Caterpillar (CAT) suffered a 50% bear in 2014 and 2015. From a technical perspective, the company seems to be on a much stronger footing now, but some chart resistance around $90 needs to be cleared to allow further gains.
In this daily chart of CAT, above, we can see a two or three-legged rally from the January low. A May-June correction gave forward-looking investors plenty of opportunity to buy. CAT is currently trading above its rising 50-day and 200-day moving averages, so math-wise we are in an uptrend.
The pattern of volume on CAT has been irregular, but rallies have seen volume surges telling you that buyers are behind the move up. The On-Balance-Volume (OBV) line is another way of looking at volume and it has been rising for much of the year confirming the price advance. The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line or positive territory, but the two moving averages that make up the indicator have begun to narrow towards a possible sell signal.
In this weekly chart of CAT, above, prices are above our long-term 40-week moving average line. Volume has slowed this year, which is not a strong endorsement of the advance and the OBV line has not broken out to a new high with prices. The weekly MACD oscillator is above the zero line and pointed up, but like the daily chart it too may be narrowing towards a liquidate longs sell signal.
Bottom line: CAT is stalled at resistance around $90 but above support in the $84-$80 area. A close above $90 could start a move to $100 or higher, while a close below $82 would turn me neutral or slightly defensive.