CAT Week

The construction and mining equipment manufacturer Caterpillar Inc. (CAT) has two things going for it: It stands to make money if China allows its currency to be more friendly to imports, and Jim Cramer's on again off again love affair with CAT is on again.

I mean, if a company has both China and Cramer on its side, happy days must surely lie ahead.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
CAT (daily) $65.85

CAT's price has risen for two straight weeks with a corresponding increase in volume. Last week's rise pushed the price above the 13- and 26-week moving averages for the first time since mid-May, setting up a challenge to the April 26 swing high of $72.83.

A rise past the point would produce a higher high, following a higher low, and continue the uptrend that has been in place since shares traded for $21.71 in early March 2009.

Reversal Levels

• $80.24, +21.9%
• $72.83, +10.6%
• $65.85 <== You are here.
• $54.89, -16.6%

Last week's volume stood 14% above the prior week's, and 45% above two weeks earlier. So there is some serious accumulation going on with a bias toward the upside.

The bullish sense is enhanced by the fact that the week closed with the price at the week's high -- no retrench for CAT. The question for traders is whether that momentum will continue intra-day in Monday's trading.

If there is a pullback, then the bullish pattern would be for that to happen early in the day, during amateur hour (before 11 a.m.), and then for the rise to continue.

The daily signals are entirely in bull phase, another reason for confidence in a continued rise.

CAT reached an all-time high of $87.00 in July 2007, and then as the global recession gripped the throats of businesses and their workers, quickly fell in a zig-zag to $30.99 in March 2009.

Since then the price has stair-stepped in a consistent uptrend.

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Disclaimer

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.