Caterpillar’s stock chart is a great example of how traders and investors focus in on a specific level after numerous tests:
Market participants involved in CAT are well aware of how it has behaved around the $80 level (green line) over the last couple years. The stock has bounced so many times from that area, including multiple rallies over the past 6 months.
After a strong start to 2013, CAT sold off back below its 200 day ma in March, and it hasn’t been able to breach that level convincingly ever since. The stock is now right between its 2013 low at 79.49 and the 200 day moving average at 87.56.
The big volume days recently have come on the downside in CAT, but the stock has been resilient, finding buyers in the low 80’s each time. The stock reports Q3 earnings in late October, which might finally be the catalyst to break the stock out of its tight 6 month range.