4 Trade Ideas for Caterpillar: Bonus Idea

• Posted by Greg Harmon
• on May 22nd, 2023

Here is your Bonus Idea with links to the full Top Ten:

Caterpillar, $CAT, comes into the week trying to bounce higher off a 50% retracement of the last leg up. It got knocked back Friday as it hit the Death Cross of the 50 day SMA crossing down through the 200 day SMA. The RSI is back near the midline with the MACD crossed up but negative. There is resistance at 220 and 225.50 then 229.50 and 232 before 237. Support lower comes at 214 and 209.50. Short interest is low at 1.3%. The stock pays a dividend with an annual yield of 2.23% and has traded ex-dividend since April 21st.

The company is expected to report earnings next on July 31st. The June options chain shows the biggest open interest at the 200 and 210 strikes on the put side and at the 230 strike on the call side. In the July chain open interest is biggest at the 175 and then 195 put strikes and from 210 to 250 on the call side. The August chain covers the earnings report and sees the biggest open interest at the 195 put strike and 6x bigger at the 260 call.

Caterpillar, Ticker: $CAT

Trade Idea 1: Buy the stock on a move over 220 with a stop at 214.

Trade Idea 2: Buy the stock on a move over 220 and add a July 210/195 Put Spread ($4.15) while selling the August 240 Calls ($3.60).

Trade Idea 3: Buy the June/July 230 Call Calendar ($2.55) while selling the June 200 Put ($1.92).

Trade Idea 4: Buy the August 195/220/240 Call Spread Risk Reversal ($1.75).

Premium Content

The Best

The Rest Premium

Free Content

The Rest

If you like what you see sign up for more ideas and deeper analysis using the Get Premium button above.   

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the May options expiration in the books, saw equity markets showed strength with the major indexes moving to higher highs.

Elsewhere look for Gold to continue its pullback in consolidation while Crude Oil consolidates in a broad range. The US Dollar Index continues to drift to the upside while US Treasuries pullback in their consolidation. The Shanghai Composite and Emerging Markets look to continue their consolidation as well.

The Volatility Index looks to remain low and stable making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY have reconfirmed their uptrends. The IWM, however, remains mired in a consolidation range. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus