Caterpillar Inc. (CAT) is a member of the elite club of 30 -- the Dow Jones Industrial Average (DJIA) -- and it reported earnings earlier Monday. The stock is trading lower after missing fourth-quarter estimates. Let's check out the charts for a "second opinion."
In the daily bar chart of CAT, below, we can see that prices have been making lower lows and lower highs the past year -- the simple definition of a downtrend. Prices were showing some improvement the past three months, however. CAT looks like it is trading just below $130 so we can make some educated guesses about what this might do to the indicators. Near-term price weakness in CAT could mean we see a test of the rising 50-day moving average line. The January rally in CAT stopped last week short of the declining 200-day line so any test of that indicator will have to wait.
The daily On-Balance-Volume (OBV) line was inching up this month so heavy volume and a lower close Monday could derail that indicator's improvement. The Moving Average Convergence Divergence (MACD) oscillator is likely to cross to the downside for a take profits sell signal.
In this weekly bar chart of CAT, below, we can see a mixed picture. Prices are in a downtrend from early 2018 and have yet to break above the negative 40-week moving average line. The weekly OBV line has been rising from the middle of October and the weekly MACD oscillator has crossed to the upside for a cover shorts buy signal.
In this Point and Figure chart of CAT, below, we can see an upside price target of $169. Prices are set to decline this morning but a trade at $120 is needed to really weaken this chart.
Bottom-line strategy: The daily bar of CAT was improving this month but weakness Monday could be the start of a change in direction. Because markets are forward looking I would not rule out that CAT comes back from a lower opening today. Let's not make a hasty decision.