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Fan Yang

Caterpillar Inc. (CAT) - Bears Still In Control

Caterpillar $CAT has been in correction mode since early 2018 when it peaked at $173.10 a share. The daily chart below shows us that this correction changed up after October - it accelerated and became sharper. Then, after a bounce from $112-$143, we are likely looking for another bearish swing.

CAT Daily Chart

(click to enlarge)

ABC Correction? 
- There was a bullish correction against the overall 2018 bearish correction.
- Price rallied from $112 to $143, in an abc correction pattern.
- Note that price held below a previous resistance pivot, and the 200-day simple moving average (SMA).
- Meanwhile, the RSI held under 60 for the most part, except for a brief violation.
- These are signs that bears are still in control.
- The $112-$116 support area back in sight, with downside risk towards the psychological level of $100.
- This $100 level was also a support/resistance pivot, as we can see on the weekly chart.
- Finally, returning towards $100 would be a pullback to the 200-week simple moving average, a scenario we can expect during a this risk averse market. 

CAT Weekly Chart

(click to enlarge)