It has been a long time since we talked about Caterpillar (CAT) making new highs.
The equipment machinery maker has been under duress since the oil market top in 2014. The Caterpillar (CAT) top was within weeks of the oil high and like so many industries that rolled over on the back of the breakdown in oil, Caterpillar tracks roll with the price of oil. I have placed a correlation indicator on the bottom pane of the chart. With the SCTR moving above 75, this looks very bullish. The price will need to take out the $85.08 level next.
The volume soared on this week's new 1-year high so I would expect more follow through. Crude oil is testing the 200 DMA this week so we'll see if a bounce in crude shows up. Based on how strong the correlation is between Caterpillar and Oil, it would appear that the energy sector is important for this trend to continue.
The Canadian investors are taking Monday as a holiday.
Good trading and have a fun, wild weekend.
Greg Schnell, CMT, MFTA
