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Caterpillar Decline may Resume

10/17/2022 6:59 PM

Quotes of Caterpillar Inc., a global manufacturer of construction and mining equipment, continue to trade within the long-term downward channel, last week the price reached its upper limit in the area of 184.90, but then lost some of the positions. Experts attribute the rise in stock prices to the rejection of the current pension policy and confirmation of the amount of dividends paid to shareholders.

The company's management said last Thursday that it would no longer adhere to the rule that employees must retire from office at the age of 65. Thus, the current executive director Jim Umpleby, who has seriously expanded the representation of Caterpillar Inc. in the construction and mining industry, will continue to hold his post. The Board of Directors also voted to maintain quarterly dividends in the amount of 1.20 USD per ordinary share, which indicates the stable position of the corporation.

In general, in the near future, the company's position will be influenced by two opposite factors, the dominance of one of which can affect the direction of price movement. The tightening of the US Fed's monetary policy will continue to put pressure on the quotes, which can lead to a significant slowdown in the growth of the US economy and even push it into recession. On the other hand, the increase in the cost of oil and gas is likely to push for an increase in the production of coal and other minerals, which will increase the profit of Caterpillar Inc., which is actively developing equipment of this profile.  

Currently, the key for the "bulls" is the level of 187.50 (Murray [2/8]), in case of its breakout, the price will leave the current descending channel and continue to rise to the levels of 193.75 (Murray [7/8]) and 200.00 (Murray [8/8]). In case of a breakdown of the level of 175.00 (Murray [4/8]), supported by the lower line of the Bollinger Bands, the decline will resume to the levels of 168.75 (Murray [3/8]), 162.50 (Murray [2/8]).

Technical indicators point out the continuation of the downward trend: the Bollinger Bands and the Stochastic are directed downwards, the MACD histogram is at the zero line, its volumes are insignificant.

Resistance levels: 187.50, 193.75, 200.00. | Support levels: 175.00, 168.75, 162.50.

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