During Friday's Mad Money program, Jim Cramer told viewers about some of the stocks that were reporting earnings this week. This coming Friday Cramer said we'll hear from ExxonMobil ( XOM) and Chevron ( CVX) , two oils which gained religion regarding climate change thanks to activist pressures. Cramer also said he'd be a buyer of Caterpillar ( CAT) as infrastructure spending continues to work its way through Congress.
In our last review of CAT on June 25, we wrote that "So far it looks like CAT has made a tradeable low in June. Aggressive traders could go long CAT at current levels risking to $195 or just below the 200-day moving average line." Prices did bounce from the middle of June but dipped briefly to a new low this month. CAT has not declined to our $195 stop point.
In this updated daily bar chart of CAT, below, we can see that prices weakened over the past two months with CAT testing the rising 200-day moving average line. The slope of the 50-day moving average line is negative.
The On-Balance-Volume (OBV) line shows some weakness from early June telling us that sellers of CAT have been more aggressive.
The 12-day price momentum study shows a low in June and a higher low in July telling us that the pace of the decline has slowed. This is a bullish divergence when compared to prices that made a low in June and a lower low in July.
In this weekly Japanese candlestick chart of CAT, below, we can see that prices have pulled back to test the rising 40-week moving average line. The weekly OBV line has been churning sideways the past four months or so. The weekly MACD oscillator is pointed down in a take profits sell mode.
In this daily Point and Figure chart of CAT, below, we can see that the software is projecting a possible target of $166.
In this weekly close only Point and Figure chart of CAT, below, we see a potential downside price target of $198 - not as bearish as the daily chart above.
Bottom line strategy: Traders who went long CAT in June should continue to hold those positions risking to $195 still. Strength above $220 will improve the picture.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
Some investors may be asking whether we're seeing another 'nail in the coffin' of the secular bull market as several transport names get downgraded. Let's not ... go off the rails.
Let's check three funds that are set to buy the close and sell the open.
Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation.
If you have questions, please contact us here.
Email
Email sent
Thank you, your email to has been sent successfully.