A look at CAT charts before earnings.

January 27, 2016

The construction equipment maker Caterpillar (CAT) is one of many large companies to report earning before the markets open on Thursday 28th Jan. Alibaba, Bristol-Myers Squibb, Valero Energy, Abbott Laboratories, Eli Lilly & Co and Potash Corp are a few others. CAT is trading near a major S/R level that may prove to be a launch pad for next trend trade here. Whether this is LONG or SHORT will most likely depend on the earnings result though!

CAT monthly: price action is back down near the 61.8% fib of the major swing high move following the GFC. This fib level ties in with the S/R region of $60 and that has been a decent reaction zone over recent years and, as a consequence, this $60 level is the one to watch after earnings. A decent result might enable CAT to carve out a bounce up off this major S/R region. However, a weak result might suggest a trip down to test either the 78.6% fib near $40 or the 100% fib near $20:

CATmonthly

CAT weekly: there is a fair bit of symmetry evident in this chart. Last week’s candle closed as a bullish-reversal ‘Hammer’ candle just above this $60 support which might seem premature ahead of its earnings result.

CATweekly

CAT daily: Price is trading under a bear trend line that has been in effect since mid-late 2014. Keep an eye on the $60 level after the earnings result.

CAT

Ichimoku Charts: CAT is trading below the Ichimoku Cloud on the weekly and daily time frames and so has some catching up to do if it does catch a bid:

CATweeklyIchi CATdailyIchi

Summary: watch CAT at the $60 level for any reaction to Thursday’s BMO earnings result:

  • a bullish result might support a bounce up off this major 61.8% fib and $60 S/R level.
  • a bearish result may see the $60 level given up for a trip down to either the $40 level or the $20 lows of the GFC.