2016-06-27 15:55:10

Caterpillar Inc., #CAT [NYSE]
Industrial goods, Agricultural and construction machinery, USA

Financial performance of the company:
Index – DJIA, S&P 500; Beta – 1.57
Capitalization – 34.86 В; Return on asset – 3.60%
Income – 2.95 В; Average volume – 6.37 М
P/E – 12.42. ATR – 2.06

Analytical review:

  • The company ranks the tenth on capitalization in the sector of “Industrial goods” among the issuers traded in the American stock market;
  • Caterpillar is incorporated into the indices DJIA and S&P 500. The decline in the American stock market has a negative impact on the company’s stocks. During trading session last Friday, ETF for the index S&P 500 (#SPY) demonstrated the most dramatic decline in the past 10 months (over 3.5%) amid the UK decisions to leave the EU. It is expected that the quotes will continue to fall;
  • Company’s last report has disappointed investors. Company’s revenue fell by 25%, to 9.46 billion USD. EPS (earnings per share) was 0.67 USD against 2.07 USD for the same period a year ago;
  • The decline in the company’s quotes was caused by the collapse of the commodities’ prices during the past few trading sessions;
  • Inefficiency of the company was confirmed by the low operating margin (5.08%) and net profit (2.91%) in comparison with the similar companies in the industry (10.56% and 6.88% respectively);
  • Technical analysis also shows bearish trend. Since the beginning of June a strong reversal pattern “ a Double Top” has been formed on the chart with the timeframe H1

Summary:

  • Consequences of Brexit, weakness of the US stock market and decline in commodity prices have caused the decline in company’s quotes. The results of the latest report will negatively affect investors’ confidence into Caterpillar’s business.
  • It is likely that in the near future company’s quotes will go down.

Trading tips for CFD of Caterpillar Inc.

Key levels:
Support levels: 71.60 USD, 70.35 USD and 69.45 USD.
Resistance levels: 73.95 USD, 76.15 USD and 78.20 USD.

Medium-term trading, Н1
Currently the issuer has broken down and consolidated below support level of 73.95 USD. If the price maintains the mirrored resistance level of 73.95 USD and in case of the respective confirmation (such as pattern Price Action), we recommend to open short positions. Risk per trade is not more than 2% of the capital. Stop order can be placed slightly above the signal line. Take profit can be placed in parts at the levels of 71.70 USD, 70.40 USD and 69.50 USD with the use of trailing stop.

Medium-term trading, Н1
Medium-term trading, Н1

Short-term trading М15
At the moment the issuer is traded between the local support and resistance levels of 73.00/73.90 USD. It is advisable to enter the market after breaking out and testing of these levels. Positions can be opened towards the signal line and the nearest support/resistance levels. Risk per trade is not more than 3% of the capital. Stop order can be placed slightly above/below the signal line. Take profit can be placed in parts of 50%, 30% and 20% with the use of trailing stop.

Short-term trading М15
Short-term trading М15