by Serge Berger | October 24, 2013 8:45 am
[1]Construction and mining machinery manufacturer Caterpillar (CAT[2]) reported its third quarter earnings Wednesday, missing on both the top and bottom lines. Earnings and revenue were also both down year over year, and the company slashed its full-year guidance, blaming weak global demand from mining companies for its products.
CEO Douglas Oberhelman is sure that demand will return … he’s just not sure when. The uncertainty around this timing is not inspiring confidence among investors, who sold the company’s stock to the tune of 6.07% on the day.
On the multiyear chart looking back to 2009, CAT has a major support line in place since August 2010. This support line, currently around the $82.50-$84 area, was once again tested during Wednesday’s selloff. CAT has now tested this line about eight times this year — as I often say, the more often a line gets tested, the more violent its ultimate breach when it happens.
The stock now also trades below its 200-day moving average red line, which has continually offered as a rough area of resistance throughout 2013. From this multiyear view, CAT is nowhere near a good enough place technically to be traded from the long side — and in fact looks much better on the short side, particularly should the aforementioned support line snap.
Source URL: https://investorplace.com/2013/10/caterpillar-dcat-stock-earnings/
Copyright ©2024 InvestorPlace unless otherwise noted.