Click to Enlarge Caterpillar (CAT) shares are dropping out of a multimonth consolidation pattern going back to April. More dangerously, this pattern is a continuation of a narrowing trading range that started in early 2011. The support line drawn above mirrors the stock’s 200-day moving average.
Today’s breakdown represents the first time CAT has moved below this level since early 2010.
In response, I’m adding a short position in CAT to my Edge Letter Sample Portfolio.