Caterpillar moved above the 200 day moving average this week to get out of the trench it was building.
This trench has been a gentle correction from a massive uptrend in 2017. The SCTR is returning to 75 which is a great signal of strength. Notice the SCTR behavior in 2017. The shaded area chart shows the $SPX relative strength moving to new 3-month highs.
Price is breaking above the channel with big volume. Lastly the momentum shown on the MACD has moved above zero. Looking left, that is a big change.
As long as it holds the 200 day moving average, this looks like a good place to find an entry. A move below the 200 would be a good place to have a stop execute.
Greg Schnell, CMT, MFTA
About the author:Greg Schnell, CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis.
Based in Calgary, he is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter.
He is also the author of Stock Charts for Dummies (Wiley, 2018).