Current trend

Shares of Caterpillar Inc., a maker of construction and mining equipment, are trading in a correction trend at 336.00.

The Q2 financial report is considered satisfactory: sales and revenue fell by 4.0%, compared to the same period last year, amounting to 16.7B dollars. Adjusted profitability and earnings per share reached record levels: EPS increased from 5.55 dollars last year to 5.99 dollars. Free cash flow was robust, and an additional 2.5B dollars was generated. Management expects that sales and revenue levels for the second half of the year may be slightly lower but the adjusted operating profit margin will exceed the upper limit of the range. In addition, the US service sector may grow in the second half of the year, which could bring the corporation additional income of up to 28.0B dollars by 2026.

It became known about an 8.0% increase in dividends, as well as the approval of a new share repurchase program of 20.0B dollars. The first payment with an increased coefficient already took place on August 20, and its value was 1.41 dollars per share, which is higher than 1.30 dollars per share earlier, and the average quarterly yield was 1.62% within the annual yield range of 6.20–7.80%.

Support and resistance

On the daily chart, the trading instrument returned to the downward channel with dynamic boundaries of 343.00–300.00.

Technical indicators are ready to give a sell signal: fast EMAs on the Alligator indicator are approaching the signal line from above, and the AO histogram is forming downward bars in the buy zone.

Resistance levels: 342.00, 362.00.

Support levels: 330.00, 307.00.

Trading tips

Short positions may be opened after the price declines and consolidates below 330.00, with the target at 307.00 and stop loss 340.00. Implementation period: 7 days or more.

Long positions may be opened after the price grows and consolidates above 342.00, with the target at 362.00. Stop loss is below 333.00.