Shares of Caterpillar (CAT) were under pressure this morning, but prices have quickly rejected the lows. This can be seen in the "hammer" pattern in the Japanese candlestick chart below.
Today's candle pattern (even though we have not closed) has a long, lower shadow, with the price action below the opening, showing that so far prices have rallied well off the early lows.
What we want to focus on in the chart above, is that CAT is close to a test and possible breakout over the declining 50-day simple moving average.
Back on Sept. 24 we said, "We could see CAT retest next support from 2010 to 2011 in the $60 to $50 area." CAT declined as low as $62.99.