Caterpillar (CAT): Construction Strength Amid Industrial Slump
Charting Caterpillar can be challenging, given the complexity of its price structure, but it’s fascinating to see how well it respects Elliott wave theory and trend channels. Despite the difficulties, the adherence to these principles makes the analysis quite promising.
The construction sector for Caterpillar remains robust, while the true growth catalyst is expected from a recovery in the mining industry, driven by demand from China and other regions. However, it’s not all positive: industrial activity in the U.S. has been sluggish, with the Institute for Supply Management Purchasing Managers' Index falling below 50 in 21 of the last 22 months—marking one of the worst streaks on record. This industrial downturn certainly adds pressure.
On a higher time frame, there’s not much new to add. However, we are looking for Caterpillar to move higher to complete wave (3). As shown in the zoomed-in chart (the chart in the left frame), we can observe how accurately the price is moving within the trendline. The "best-case" scenario for us would involve a push above the channel, followed by a sell-off. If this happens, it will provide a clearer indication that a larger correction—wave (4)—is imminent.
The construction sector for Caterpillar remains robust, while the true growth catalyst is expected from a recovery in the mining industry, driven by demand from China and other regions. However, it’s not all positive: industrial activity in the U.S. has been sluggish, with the Institute for Supply Management Purchasing Managers' Index falling below 50 in 21 of the last 22 months—marking one of the worst streaks on record. This industrial downturn certainly adds pressure.
On a higher time frame, there’s not much new to add. However, we are looking for Caterpillar to move higher to complete wave (3). As shown in the zoomed-in chart (the chart in the left frame), we can observe how accurately the price is moving within the trendline. The "best-case" scenario for us would involve a push above the channel, followed by a sell-off. If this happens, it will provide a clearer indication that a larger correction—wave (4)—is imminent.
Professional Trading and Investing Group
Daily Stocks & Crypto Analysis | Daily Bitcoin Updates | Trading Challenges & more
Join us on:
Discord: discord.gg/ftPWbe8MJy
Telegram: t.me/+U7KhRNv61XczZmQ0
Daily Stocks & Crypto Analysis | Daily Bitcoin Updates | Trading Challenges & more
Join us on:
Discord: discord.gg/ftPWbe8MJy
Telegram: t.me/+U7KhRNv61XczZmQ0
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.