Caterpillar's next rally depends on this one level, trader says $CAT (via TradingNation)
has gained 17% in 2019, Caterpillar has risen just 4%. The industrial giant has been punished by escalating U.S.-China trade tensions and fears of a slowing global economy.
But, JC O'Hara, chief market technician at MKM Partners, said this consolidation is natural after such a strong performance in recent years. "If we go back to 2016, many investors are forgetting that Caterpillar doubled to the 2018 highs, and often when stocks have that sort of move, there's time needed to digest those moves, and that's precisely what we believe happened in 2018 and for the better part of this year," O'Hara said Thursday on CNBC's "From the beginning of 2016 to a record high in January 2018, Caterpillar shares raced up 208%.
"Shorter term, Caterpillar has stirred up some demand around that $110 support level, and now it's inching closer to upper overhead resistance. I really think if it breaks above $140, the next 10% will be higher to our $160 technical price target," said O'Hara. To get to its resistance at $140, the shares would need to add 6%. A move to $160 implies 21% upside from current levels.declined Thursday after Wells Fargo downgraded both to market perform. Analysts said they expect weaker U.S. demand for construction and farm equipment next year."Deere actually fundamentally isn't bad at all. We're looking at about 12% growth for next year, which is ahead of the overall market expectations.
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