In this updated daily bar chart of CAT, below, we can see that prices have been in a great looking uptrend since March. A ruler would be able to fit a really "neat" uptrend line. Prices have been staying above and bouncing off the rising 50-day moving average line.
On Wednesday, CAT closed below the 50-day line, but bounced up Thursday. The On-Balance-Volume (OBV) line shows a steady rise until this month when the line weakens. This shift in direction suggests a shift from aggressive buying to aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take-profits sell signal. The oscillator is not all that far above the zero-line.
In this weekly bar chart of CAT, below, we see some developing weakness. Prices are in an uptrend above the rising 40-week moving average line but the trading volume has been diminishing since March. The weekly OBV line shows a rise from April but a recent dip. The MACD oscillator has narrowed in recent weeks and is very close to a bearish downside crossover.
In this daily Point and Figure chart of CAT, below, we can see that the software is reading the X's and O's as a weak pattern and projecting a downside price target in the $162 area.
Bottom line strategy: I have no knowledge of what CAT is going to report, but I can say that the charts of CAT have weakened so far this month. Earnings numbers could precipitate further declines in the days ahead.
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Rather than waste time trying to predict when, or if, a recession is on the way, why not simply buy shares that appear quite undervalued? Here are two to start with.
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