Caterpillar Inc. (CAT) shares are up in pre-market trading here on Tuesday after the construction and mining equipment giant reported better-than-expected second-quarter earnings but warned of a possible slowdown in third-quarter sales. Let's check on the condition and position of Caterpillar's charts and indicators.
In this daily bar chart of CAT, below, I can see that prices have been trending higher for much of the past 12 months. CAT made a low in late September, which was just a few days or so ahead of the low in the broad market averages. Prices are trading above the rising 50-day moving average line and above the rising 200-day line. The On-Balance-Volume (OBV) line rose from October to the end of January and then declined. A fresh advance started in early June and supports the recent price increase, with buyers of CAT showing more aggressiveness than sellers of CAT. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in bullish territory.
In this weekly Japanese candlestick chart of CAT, below, I can see a bullish setup. Prices are in a longer-term uptrend and trade above the rising 40-week moving average line. The candles are bullish with no top reversal pattern and no upper shadows. The OBV line is pointed upward and is not far from making a new high. The weekly MACD oscillator is bullish.
In this daily Point and Figure chart of CAT, below, I can see a potential upside price target in the $331 area.
In this weekly Point and Figure of CAT, below, I see a target in the $335 area.
Bottom line strategy: I reviewed the charts of CAT on July 19 and recommended that traders who are long CAT "should continue to hold. Raise stops to $239. My targets are the round number of $300 and then the $331-$335 area." Today I recommend that traders continue to hold those longs in CAT. Raise stops to $251. The $331-$335 area remains my price target for now.
