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Caterpillar (CAT - 44-5/8) will be one of several stocks to watch today, as the company reported earnings this morning that beat analysts' estimates. CAT said fourth-quarter earnings were $0.76/share versus estimates of $0.65 share. This is the company's fifth straight earnings suprise, and fourth-quarter earnings were 13.4% ahead of the fourth quarter of last year.
However, CAT warned 2001 will be challenging for the industry and expects that net will be 5-10% below 2000.
This earnings announcement comes at an interesting time from a technical perspective, as CAT has just retraced 50% of its May 1999 peak at 67-7/16 and its October 2000 low of 29-9/16. This 50% retracement level is around the 47 area, and the shares peaked in early January at 49. In December, the shares experienced their first monthly close above its 20-unit monthly moving average since October 1999. While this is encouragin, the equity is threatening to move back below this declining trendline, currently sitting at 44.
While the shares have a put/call open interest ratio that exceeds 1.0, be careful in your interpretation of this. While sentiment is negative, the fundamental outlook may justify such negativity and thus is not as bullish in its implications.