When I reviewed the charts of heavy equipment maker Caterpillar (CAT) on Tuesday, prior to its latest earnings release, I wrote that "... the stock's refusal to break to the downside may be a tell that the next move for CAT could be to the upside. Stay nimble."
Despite a top-line and bottom-line beat Thursday morning, shares of CAT have broken to the downside in trading. I am not sure how optimistic some traders were but a bearish reaction to what seems to be bullish news is problematic. Thursday's close will be very important.
In the daily bar chart of CAT, below, I can see a "coin toss" picture. Prices gapped lower Thursday and broke below the 200-day moving average line while making a new low for the move down.
The daily On-Balance-Volume (OBV) line shows weakness from late January but so far the OBV line has yet to make a new low for the move down. The 12-day price momentum study shows higher low from late March for a bullish divergence when compared to the price action.


