Caterpillar Inc. (NYSE:CAT) opened with a nice gap up yesterday but failed to protect the intraday gains and ended the trading session almost flat, with a minor loss of 0.09%. The volume surged to 19 million against the daily average of 6 million. The upside in the morning came on the back of a result that beat the expectations and improved full year profit guidance.
Caterpillar Inc. (NYSE:CAT) reported a 4% lower revenue of $12.7 billion but that exceeded the consensus of a 6% decline. The real jump was seen in the first quarter earnings at $1.81 against $1.41, as reported in the same quarter last year. Still the investors remain worried about the weakness seen in the construction equipment segment and the stress its energy and transportation division is facing.
Caterpillar Inc. (NYSE:CAT) is technically one of the most volatile stocks in the long term. The bear market of 2008 wiped out all the gain of nearly a decade but the recovery was dramatic to say the least. The V-shaped recovery took about 18 months only to register a new life time high and extended that from the 2007 high of $87 to $116.55 by 2011. The last 2-3 years saw the stock essentially stuck in the broad range of $80-$110. The last 12 months have not been great for the company and technically, the lower boundary of the range around $78-$80 is under threat at the moment. The current bounce from that support area structurally still doesn’t look very strong.
In the latter part of 2014, a very important trendline support was broken and that could act as a stiff resistance now. That line may limit the current bounce below $90 for the next few weeks at least but a continuous failure to rise above $90 may invite the bears to attempt a push below $78.
