CAT breaks below 20-day moving average for the first time since July 9th
Caterpillar Inc. (CAT) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, CAT finished the month 5.04% higher at 132.88 after tanking $3.85 (-2.82%) today on high volume, notably underperforming the Dow Indu. (0.44%) following today's earnings report. This is the biggest single-day loss in over a month. Trading up to $2.22 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on June 1st, CAT gained 2.34% on the following trading day. Ending the day with an indecisive close, neither buyers nor sellers were able to gain control during the session.
Daily Candlestick Chart (CAT as at Jul 31, 2020):
CAT reported earnings of $1.03 per share before today's market open. With analysts having expected an EPS of $0.66, Caterpillar Inc. topped market expectations by 56.1%. The company's last earnings report was released on April 28, 2020, when Caterpillar Inc. reported earnings of $1.6 per share missing market expectations by -8.6%.
Friday's trading range has been $4.94 (3.73%), that's far above the last trading month's daily average range of $3.05. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for CAT.
Two candlestick patterns are matching today's price action, the Bullish High-Wave Candle and the Bullish Spinning Top which are both known as bullish patterns.
The share closed below the 20-day moving average at 134.47 for the first time since July 9th.
While the stock is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish High-Wave Candle" stand out. Its common bullish interpretation has been confirmed for Caterpillar. Out of 18 times, CAT closed higher 66.67% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after five trading days, showing a win rate of 55.56% with an average market move of -0.43%.