A Meteoric Rise Is Pushing This “Old Economy” Stock to Its Limits

[Trading With Larry Benedict]( A Meteoric Rise Is Pushing This “Old Economy” Stock to Its Limits By Larry Benedict, editor, Trading With Larry Benedict One “old economy” stock that has benefited enormously from the rotation out of Big Tech is Caterpillar (CAT). Along with most other stocks in the Dow Jones Index, CAT has been on an absolute tear recently… From its late September low to its recent high, CAT shares have rocketed by 50%. That’s a huge move for any stock – especially an old economy stock – in such a short time. The move has also propelled CAT to its highest level this year – just a fraction below its all-time high from June last year ($246.69). However, so much buying momentum has also put the stock into overbought territory. With CAT now straining to maintain those highs, today we’ll check out what’s in store from here… Recommended Link [America’s “Permanent Recession” Is Here]( [image]( Life in America is not as it seems… And thanks to recent unprecedented decisions by a strange force of unelected officials… Americans may now experience a level of financial insecurity and suffocation of freedoms bigger than the crisis of 2000…2008… and 2020 - COMBINED. Months from now we may look back to – this moment – as the end of the middle class. Stephen Roach, a former chairman at Morgan Stanley, says: [“U.S. living standards are about to be squeezed as never before.”]( Newsweek says: [“[This] Will Be The End of American Freedom.”]( And HuffPost says: [“[This] Is Making The Rich Richer, and Leaving You Behind.”]( But a new “boots on the ground” investigation reveals Americans will be forced to make a drastic decision… Become one of the ‘new poor’ in America… Or the ‘new rich’. While everyone else could end up in “Permanent Recession”. [Click Here To Get The Details.]( -- Warning Signs of a Potential Reversal The 50-day moving average (MA – blue line) shows CAT’s long-term trend so far this year… It experienced a sideways, rangebound pattern in the first half of 2022. Then it drifted lower from June through September. Recently, a rally began to gather momentum around mid-October. Check out the chart… Caterpillar (CAT) [Image] Source: eSignal Two key technical indicators have coincided with CAT’s current rally… - The Relative Strength Index (RSI) formed a ‘V’ out of oversold territory (lower grey dashed line) and then began to rally higher. That move gathered further momentum when the RSI broke up through resistance (green line) and gained traction in the upper half of its band. - The 10-day MA (red line) bullishly broke above the 50-day MA. Since then, the 10-day MA has continued to accelerate higher and further away than the 50-day MA. Adding to the upward momentum, CAT’s Q3 earnings results on October 27 were well received, causing its stock to gap higher (red circle). However, the recent price action has thrown up a couple of warning signals… [#1 Expert on Seeking Alpha reveals: The SWAN Retirement Blueprint]( After hitting its recent high on November 14, CAT retraced lower before again trying to rally higher. But this time, the rally petered out when CAT ran into resistance (upper orange line). For CAT’s rally to resume, it first needs to break above this price level (resistance) and hold it. Here’s the chart again… Caterpillar (CAT) [Image] Source: eSignal The other warning sign relates to the RSI (lower orange line). As you can see, the RSI has been trending lower… while CAT’s stock price has been struggling to break above resistance. So, what am I expecting around here? Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Looking for a Reversal Off Recent Highs Buying momentum drives a stock’s price higher. We saw that with CAT’s current rally as the RSI tracked all the way from oversold right up to overbought territory. However, when buying momentum fizzles out or reverses, that leaves the stock vulnerable to a potential fall. And a potential mean reversion trade… If the RSI continues to track lower, then we can expect to see CAT also reverse lower off its recent highs. A move by the RSI back toward support (green line) could then provide the setup for a potential short trade. The other thing I’ll be watching is the action of our MAs… If the 10-day MA reverses and starts tracking back toward the 50-day MA (and eventually crosses below it), then that would add further confirmation to an emerging down move. Regards, Larry Benedict Editor, Trading With Larry Benedict Reader Mailbag Which way do you think CAT will move next? Let us know at feedback@opportunistictrader.com. IN CASE YOU MISSED IT… [Whitehouse doubles-down on 'New Order'. Prepare NOW]( Things have changed in America. There's a [New Order](... It took hold secretly back in 2020… This is how I knew inflation would grip our country well before mainstream economic "experts" … And why I was able to set my portfolio up to benefit while most people continue to suffer... Yet the 'New Order' is just beginning... And the consequences could be ruinous if you’re unprepared… [>> To find out how to prepare, click here now, and I'll explain everything...]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. 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