Chart of the Day: Caterpillar (CAT)

A key level of resistance has formed on the Caterpillar Inc. (CAT) chart.  If this market continues to rally everyday, this level could be eclipsed soon.

Caterpillar is the largest manufacturer of heavy equipment, power solutions, and locomotives. While the company has seen reduced demand due to the coronavirus, its cash and liquidity remain strong. Cash and short-term investments were $8.8 billion through the second quarter. The company has also reduced discretionary expenses and suspended 2020 base salary increases due to the pandemic.

Take a look at the 1-year chart of CAT below with added notations:

Chart of CAT provided by TradingView

Over the course of the past six months, CAT has formed a key level of resistance at $140 (blue line). The stock has tested that $140 level several times since the beginning of the year.

If/when the stock were to surpass and close above $140, a trader could buy the stock with the expectation of a breakout.

The stock is currently trading less than 5% away from the $140 resistance level, so keep an eye out on CAT this week as the market continues to trend higher.

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Good luck!

Christian Tharp, CMT

@cmtstockcoach

CAT shares were trading at $134.10 per share on Wednesday morning, up $2.58 (+1.96%). Year-to-date, CAT has declined -7.03%, versus a 4.18% rise in the benchmark S&P 500 index during the same period.

Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock.

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