Caterpillar (CAT) is one of my favorite stocks primarily as it can be a bellwether, and is also one I have written extensively about over the years, even prior to Donald Trump’s appointment. 2020 was a pivotal year for the company which saw extreme buying in March following the sharp Covid reversal but was the beginning of the long-term bullish trend which has been in place ever since. More recently, the start of 2021 began with a period of congestion, but February’s price action saw the price move strongly from this region on good volume and continue through the $200 per share price to currently trade at the time of writing at $218.06. What is perhaps most interesting about the journey higher are the correction points which have seen the stock move lower, only for it to be supported by buyers moving in, a feature we saw in October 2020 and repeated in January 2021.

These are always classic signals where the down candle spread is narrow but the volume is high, thereby sending a strong signal of buying. From a volume price perspective, this is an anomaly and hence we can expect to see prices rise further as a result. |Moreover, the stock is currently approaching a low volume node and therefore the price is likely to move through this region relatively quickly a view confirmed by the trend monitor indicator for NinjaTrader which has remained firmly blue since June 2020.

(Click on image to enlarge)