4 Trade Ideas for Caterpillar: Bonus Idea

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

Caterpillar, $CAT, comes into the week at resistance with the Bollinger Bands® opening higher. It moved back over the 50 day SMA last week for the first time since January. It has a RSI moving into the bullish zone with the MACD rising and positive. There is resistance at 327 and 330 then 336 and 343.50 before 350.75 and 358. Support lower comes at 318.50 and 308.50. Short interest is low at 1.7%. The stock pays a dividend with an annual yield of 1.73% and has traded ex-dividend since April 21st.

The company is expected to report earnings next on August 4th. The May options chain shows biggest open interest the 310 and 300 put strikes and then much bigger on the call side at the 340 strike. The June chain has open interest spread from 350 to 270 on the put side and focused from 330 to 360 on the call side. The July chain has biggest open interest at the 300 put strike and then 340 then 360 call strikes. Finally, in the August chain, open interest is spread from 360 to 280 on the put side and biggest at 400 on the call side.

Caterpillar, Ticker: $CAT

Trade Idea 1: Buy the stock on a move over 327 with a stop at 315.

Trade Idea 2: Buy the stock on a move over 327 and add a June 320/310 Put Spread ($3.35) while selling the July 370 Calls ($2.35).

Trade Idea 3: Buy the June/July 350 Call Calendar ($3.45) and sell the June 300 Put ($3.60).

Trade Idea 4: Buy the August 300/340/380 Call Spread Risk Reversal ($1.40).

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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 FOMC meeting in the books, equity markets showed resilience holding up in their short term rises.

Elsewhere look for Gold to continue its consolidation in the uptrend while Crude Oil continues to trend lower. The US Dollar Index continues to drift to the upside in a bear flag while US Treasuries consolidate in their downtrend. The Shanghai Composite looks to continue in consolidation while Emerging Markets consolidate in a broad range just under resistance.

The Volatility Index looks to continue moving back to normal, making the path easier for equity markets to the upside. Their charts show short term strength on both timeframes. On the shorter timeframe the IWM, the QQQ and the SPY are on the verge of breaking higher and a shift to bullish momentum. On the longer timeframe the classic “V” recovery continues to build in all 3 Index ETFs. 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.

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