3 Big Stock Charts for Friday: United States Steel Corporation (X), Caterpillar Inc. (CAT) and Cummins Inc. (CMI)

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The market is finally giving a few signs that traders are taking profits from the Trump Rally.  Yesterday’s selling in the industrial, materials and steel companies confirmed that these overbought sectors were ready for a pullback. It’s important to remember that these were triggered by headline news and may result in opportunities for traders to step into some relative strength leading names at a discount.

Today’s three big stock charts looks at shares of United States Steel Corporation (NYSE:X), Caterpillar Inc. (NYSE:CAT) and Cummins Inc. (NYSE:CMI) as all three are Trump Stocks that may be flashing signs of a technical opportunity to buy on weakness.

United States Steel Corporation (X)

Source: Chart courtesy of StockCharts.com

Our models have been bullish on U.S. Steel stock for some time as it was clear that demand and potential for price protection would help its bottom line. X stock is up more than 300% over the last year, but even this parabolic trade still has upside.

The last two days have seen U.S. Steel shares tumble from just above $40 to $35 on the back of profit-taking and selling on rumors.

The selloff has landed X shares at their 50-day moving average for the first time since November.  Technical traders will take note of the huge selling volume that occurred on Thursday, indicating that the easy sellers are out of U.S. Steel stock and we’re more likely to see some volume come in to defend the shares at $35.

Longer-term, X shares remain in bullish trends, supported by rising 50-, 100- and 200-day moving averages. The stock should also see some support from the round-numbered $36-level that has held as resistance and support over the last two quarters.

The bottom line for X stock is that the technicians will pick up on the sale value of U.S. Steel as you can now buy shares for just slightly higher than the prices paid just ahead of its recent positive earnings report.

Caterpillar Inc. (CAT)

Source: Chart courtesy of StockCharts.com

Shares of Caterpillar find themselves in the same position as U.S. Steel as traders have clearly taken yesterday’s declines as a chance to lock in some profits. CAT stock declined almost 5% over the last two trading sessions on higher-than-average volume.

Caterpillar traders ignored the 50-day moving average as the stock had already been showing some signs of weakness, but the 100-day trendline is now approaching as potential support.

Currently, the 100-day for CAT shares sits at $92.35, a level that should garner some buying from the quants and chart watchers.

In addition, Caterpillar is nearing an oversold reading from its RSI that would have even more technical traders jumping on the shares as short-term trades.

Watch for a slight dip below $92 to correlate with an oversold reading that will get CAT back on track to setting new highs.

Cummins Inc. (CMI)

Source: Chart courtesy of StockCharts.com

Powering, quite literally, the infrastructure rally is Cummins Incorporated. The diesel engine manufactures supplies power equipment for all kinds of machinery and other items that are used in construction and maintenance.

CMI shares are 52% higher than this point last year and have been a technical dream to trade as they continue to be very sensitive to technical indicators.

The current pullback in Cummins only amounts to 3.5%, which means that we could see some further downside over the next week for this industrial company.

The 50-day moving average for CMI sits at $143.50 right now and it is our model’s first line of technical support. Volume has been tapering on the shares as Cummins stock is also headed towards a potential short-term oversold reading from its RSI.

The combination of support from the 50-day and a potential short-term oversold reading from the RSI will be more than enough to get the CMI bulls back on board to turn the stock back towards the $155 price level.

As of this writing, Johsnon Research Group did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/02/3-big-stock-charts-for-friday-united-states-steel-corporation-x-caterpillar-inc-cat-and-cummins-inc-cmi/.

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