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  1. Home
  2. / Investing

Staying Long Shares of Caterpillar Ahead of Friday's Earnings

Let's check out the charts and indicators.
By BRUCE KAMICH
Jul 26, 2021 | 12:20 PM EDT
Stocks quotes in this article: XOM, CVX, CAT

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.
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TAGS: Investing | Stocks | Technical Analysis | Trading | Construction & Engineering | Industrial Goods | Mad Money | Earnings Preview

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