| Scenario | |
|---|---|
| Timeframe | Weekly |
| Recommendation | BUY STOP |
| Entry Point | 288.00 |
| Take Profit | 310.00 |
| Stop Loss | 280.00 |
| Key Levels | 250.00, 272.00, 288.00, 310.00 |
| Alternative scenario | |
|---|---|
| Recommendation | SELL STOP |
| Entry Point | 272.00 |
| Take Profit | 250.00 |
| Stop Loss | 280.00 |
| Key Levels | 250.00, 272.00, 288.00, 310.00 |
Current trend
Shares of Caterpillar Inc., a global manufacturer of construction and mining equipment, are trading around 280.00.
The company released its second quarter financial report last week. Operating income rose a record 88.0% year-on-year to 3.65 billion dollars, beating Bloomberg's preliminary estimate of 2.94 billion dollars. Quarterly revenue also exceeded the 16.39 billion dollars forecast to reach 17.32 billion dollars. The fastest sales growth of 22.0% was recorded in the Texas-based division, mainly due to strong demand for transportation services. Earnings per share also significantly exceeded forecasts, amounting to 5.55 dollars compared with preliminary estimates of 4.57 dollars.
At the same time, the management of Caterpillar Inc. notes strong demand for heavy construction equipment, which has begun to rise strongly against the background of the allocation of 1.0 trillion dollars by the administration of President Joe Biden to modernize the country's railway infrastructure in 2021. Against this background, the operating margin forecast was adjusted to 18.0-21.0% from 10.0-13.0% previously.
In addition, the Board of Directors approved the payment of quarterly dividends with a new rate of 1.3 dollars, which will be sent to the shareholders on August 18. Estimated annual profit in this case can be 1.97% per annum.
Support and resistance
On the daily chart, the quotes are kept within the global ascending channel with dynamic boundaries 215.00-290.00 and, having reached the resistance line, they are getting ready to continue their growth.
Technical indicators strengthen the buy signal: fast EMAs on the Alligator indicator are still above the signal line, and the AO oscillator histogram is in the buy zone.
Support levels: 272.00, 250.00.
Resistance levels: 288.00, 310.00.
Trading tips
Long positions can be opened when the price consolidates above the resistance level of 288.00 with the target of 310.00. Stop-loss — 280.00. Implementation time: 7 days and more.
Short positions can be opened after a reversal and continuation of the decline in the asset, as well as fixing the price below the support level of 272.00 with the target of 250.00 and stop-loss at 280.00.
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