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Caterpillar Inc. Market Update

3/23/2023 3:36 PM

This week, shares of Caterpillar Inc., a global manufacturer of construction and mining equipment, attempted to grow after a two-week decline, but it turned out to be short-lived. The quotes rose to the level of 226.56 (Murray level [1/8]), but then resumed the decline amid investors' disappointment with the results of the US Fed meeting.

Thus, the regulator again raised the interest rate by 25 basis points and brought it to 5.0%, even despite the serious problems of the American banking sector. At the same time, the comments of the head of the department Jerome Powell turned out to be contradictory. He admitted that officials had indeed discussed the possibility of a pause in the cycle of tightening monetary policy, but so far postponed the decision on this issue due to high inflation and a strong labor market. Powell also pointed out that the transition to a new decrease in the value is not yet included in the basic scenario of the regulator's actions, even though credit conditions have now significantly tightened, which puts pressure on households and business activity.

An additional impact on the stock market comes from the statement of US Treasury Secretary Janet Yellen, who confirmed in the Senate that the government is not yet working on the introduction of full insurance of bank deposits. This means that the authorities will secure funds stored only in large systemically important financial structures. In general, the continued pressure of the US Fed and the risks of a banking crisis may negatively affect business activity and the economy, which, in turn, may reduce revenues from sales of products of engineering giant Caterpillar Inc. It is these concerns that are now actively putting pressure on prices.    

Now the price is close to the mark of 218.75 (Murray level [0/8]), consolidation below which will give the prospect of further movement to the area of 203.12 (Murray level [-2/8]). The key mark for the "bulls" is 234.38 (Murray level [2/8]), supported by the middle line of the Bollinger Bands, when it is broken out, the price growth will be able to resume to the levels of 250.00 (Murray level [4/8]) and 265.62 (Murray level [6/8]).

The downward trend in the pair persists, as evidenced by the downward reversal of the Bollinger Bands and the increase in the MACD histogram in the negative zone. The upward reversal of the Stochastic does not exclude corrective growth, but its potential looks limited.

Resistance levels: 234.38, 250.00, 262.50. | Support levels: 218.75, 203.12.

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