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Caterpillar Inc. Continues to Prove Bearish Investors Wrong

Dow construction equipment firm sports strong earnings, strong technicals, but negative investor sentiment

by Joseph Hargett (jhargett@sir-inc.com) 11/4/2009 10:20 AM

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Caterpillar Inc. (CAT: sentiment, chart, options) is the world's No. 1 maker of earth moving machinery and a leading supplier of agricultural equipment, according to Hoover's. The firm has plants worldwide and sells its equipment globally via a network of 3,500 locations in 180 countries.

From a technical perspective, CAT has been a strong performer since the March bottom, soaring more than 159% during this time frame. Additionally, the stock has gained momentum along support at its 10-week and 20-week moving averages since mid-July. CAT is now faced with potential resistance in the round-number 60 level, an area that provided support for the shares in January, September, and October 2008.

There is plenty of sideline money still available to the equity, however. In fact, heavy investor pessimism could be a sign that the stock is poised to move F.A.R.: Fast, Aggressively, and in the Right direction. For such potentially lucrative moves in an equity, it must adhere to our Expectational Analysis ^� methodology, which takes into account technical performance, fundamental wherewithal, and the all-important investor sentiment aspect.

In today's edition of the Casual Contrarian, I take a closer look at the three elements of Expectational Analysis ^� and how they apply to Caterpillar in order to determine if the stock would make a nice contrarian play. So sit back, enjoy, and good luck in your trading.

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Caterpillar Inc. Continues to Prove Bearish Investors Wrong

Dow construction equipment firm sports strong earnings, strong technicals, but negative investor sentiment

by Joseph Hargett (jhargett@sir-inc.com) 11/4/2009 10:20 AM

CAT

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