Caterpillar (CAT) is the Stock of the Day Wednesday at Real Money. The manufacturer of construction and mining equipment released their Q3 numbers Wednesday morning, and according to media reports they lowered their full-year profit outlook to a range of $10.59 to $11.09 per share, compared to the previous outlook which was at the low end of the $11.75 to $12.75 range. The revised guidance now assumes modestly lower sales in 2019.
We looked at CAT last week and concluded that, "CAT is looking better so patient investors could go long CAT at current levels risking a close below $120 for now. $177 is our upside price target." Let's check out the charts and indicators of this company again.
In this daily bar chart of CAT, below, we can see the price action through Tuesday's close. A 1% dip anticipated for the opening Wednesday may mean just a retest of the slightly rising 200-day moving average line.
The 50-day moving average line now has a positive slope and the On-Balance-Volume (OBV) line has "ticked" up, signaling more aggressive buying ahead of this earnings report.
The Moving Average Convergence Divergence (MACD) oscillator has moved above the zero line for an outright go long signal.
In this weekly bar chart of CAT, below, we can see that the indicators continued to improve the past week. Prices are above the rising 40-week moving average line.
The OBV line has turned upwards and the MACD oscillator continued to improve.
In this Point and Figure chart of CAT, below, we can see an upside price target of $174 still. A decline to $115.37 is probably needed to weaken this chart.
Bottom-line strategy: If investors take CAT's latest numbers in stride our view that CAT is ending its long decline is still good. Continue to hold recent longs risking below $120 for now.
(Caterpillar is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CAT? Learn more now.)
