Bouncing back from a three-month drop into the yellow zone, heavy equipment producer Caterpillar (CAT) has returned to the Green Favored Zone of the SIA S&P 100 Index Report. Yesterday, CAT climbed 13 spots to 23rd place and it is up 30 positions in the last month. Caterpillar (CAT) has come under renewed accumulation this month, triggering several bullish technical signals including a breakaway gap, retaking both its 50 and 200-day moving averages, completing a bullish Falling Wedge pattern and snapping a downtrend line.
The shares continue to approach initial resistance between the $250.00 round number and a previous peak near $255.00. Additional potential resistance points on trend appear at the February peak near $265.00 and $300.00 where a round number and a measured move converge. Initial support appears at the 200-day average near $220.00.
Earlier this month, a correction in Caterpillar (CAT) shares ended with a successful retest of support just above the $200.00 round number. Since then, the shares have turned upward, completing a bullish Double Top breakout and advancing back up into the $240s.
Currently, the shares are testing a downtrend resistance line. A close above $248.65 would signal that the shares have resumed their upward trend with next potential resistance at the February peak near $263.90, or $297.15 which is based on a horizontal count. Initial support appears near $225.25 based on a common 3-box reversal.
With a perfect SMAX score of 10, CAT is exhibiting strength across the asset classes.
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