Sergey Kamenshikov, Ph.D.
IFC Markets
Markets positively react on small fine imposed on Caterpillar
Caterpillar Inc. stocks sky-rocketed after the US court found the company guilty of causing damage to its supplier Miller UK Ltd. Markets positively reacted on a relatively small fine of $74mln imposed on Caterpillar. Will the stocks continue their way up?
The case against the company was commenced way back 5 years ago. The ongoing trial lost by Caterpillar took 8 weeks. Miller UK Ltd accused the US company of stealing its trade secrets to design the diggers. Since the start of 2015 the Caterpillar stocks have already lost 26% underperforming the Dow Jones Industrial which lost only 2%. In the meantime, Caterpillar got net quarterly profit throughout the whole year although the accumulated net profits fell 25% in 9 months compared to the same period of 2014. The company’s performance may improve in Q4. In November 2015 the gross sales of machinery and equipment fell only 11% compared to November 2014.
CАТ
On the daily chart CAT: D1 failed to renew the 5-year low for the second time and began the moderate growth within the neutral trend. Parabolic and MACD indicators give buy signals. The Bollinger bands have slightly contracted which may mean lower volatility and are tilted upwards. RSI has formed the positive divergence. The bullish momentum may develop in case Caterpillar stocks surpass the last or the second fractal highs at 70.45 or 72.75. These levels may serve the point of entry. The initial risk-limit may be placed below the last fractal low at 64.1. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 64.1 without reaching the order at 70.45 or 72.75, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Buy
Buy stop above 70.45 or 72.75
Stop loss below 64.1
Caterpillar Inc. stocks sky-rocketed after the US court found the company guilty of causing damage to its supplier Miller UK Ltd. Markets positively reacted on a relatively small fine of $74mln imposed on Caterpillar. Will the stocks continue their way up?
The case against the company was commenced way back 5 years ago. The ongoing trial lost by Caterpillar took 8 weeks. Miller UK Ltd accused the US company of stealing its trade secrets to design the diggers. Since the start of 2015 the Caterpillar stocks have already lost 26% underperforming the Dow Jones Industrial which lost only 2%. In the meantime, Caterpillar got net quarterly profit throughout the whole year although the accumulated net profits fell 25% in 9 months compared to the same period of 2014. The company’s performance may improve in Q4. In November 2015 the gross sales of machinery and equipment fell only 11% compared to November 2014.
CАТ
On the daily chart CAT: D1 failed to renew the 5-year low for the second time and began the moderate growth within the neutral trend. Parabolic and MACD indicators give buy signals. The Bollinger bands have slightly contracted which may mean lower volatility and are tilted upwards. RSI has formed the positive divergence. The bullish momentum may develop in case Caterpillar stocks surpass the last or the second fractal highs at 70.45 or 72.75. These levels may serve the point of entry. The initial risk-limit may be placed below the last fractal low at 64.1. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 64.1 without reaching the order at 70.45 or 72.75, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Buy
Buy stop above 70.45 or 72.75
Stop loss below 64.1
This overview has an informative character and is not financial advice or a recommendation. IFCMarkets. Corp. under any circumstances is not liable for any action taken by someone else after reading this article.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.