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Caterpillar Inc. Trading within the Broadening Formation Pattern

3/29/2023 1:20 PM

Stocks of Caterpillar Inc., a global manufacturer of construction and mining equipment, are trading in a corrective trend and reaching the mark of 220.00.

The global stock growth cycle has come to an end, and a seasonal correction awaits the company ahead, as some analysts have already announced. The fact is that the market for special equipment is very narrow, and the bulk of orders fall at the end and beginning of the year. At least, representatives of Baird lowered the rating of Caterpillar Inc. from "buy" to "neutral" against the background of the price approaching a cyclical turning point. Experts see the shares in the range of 180.0–190.0 dollars in Q2 2023 and predict a reduction in revenue and earnings per share during this period due to a seasonal drop in demand for products.

As for the company's financial report, it is scheduled for April 27, and the revenue forecast assumes 15.0B dollars, which is lower than 16.6B dollars in the previous quarter, and earnings per share are expected to be around 3.74 dollars, which is also inferior to 3.86 dollars earlier. 

At Caterpillar Inc. the date of the next dividend payment has not yet been set, however, it is likely to take place in mid-May and amount to 1.2 dollars per share.

On the daily chart, the shares continue to trade within the Broadening Formation pattern, forming a new wave of decline in the direction of the support line at around 150.00.

Technical indicators hold a stable sell signal, which is gradually increasing: the fast EMAs on the alligator indicator are still well below the signal line, and the AO histogram is trading in the sales zone.      

Support levels: 213.20, 200.90. | Resistance levels: 225.60, 241.00.

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