Earlier today on Twitter, we posted the following chart and asked the Twittersphere whether they could guess the stock and whether or not they would buy it. What would you do? Looking at the chart, it looks like a textbook breakout from a multi-year range which most technicians would consider to be a bullish pattern.
So what was the stock in the chart? Actually is was Caterpillar’s (CAT) chart upside down. Here is a look at the chart of CAT going even further back to 2010. As shown, shares of the stock have not only taken out their August lows and traded to 52-week lows, but they are now at their lowest level since October 2011. While the S&P 500 is currently 7% from its all-time closing high, shares of CAT are down 40% from their closing high in February 2012!
While shares of CAT have missed out on most of the bull market, it shouldn’t be too much of a surprise. In 2011, the company bought mining company Bucyrus for $7.6 bln right near the peak in commodity prices. Also, earlier this week Caterpillar released what can only be described as poor y/y sales for the three-month period ending in August. We sent out a B.I.G. Tips report to clients on the latest sales release yesterday, and the chart below shows the overall change in global sales for Caterpillar going back to early 2009. As shown, CAT hasn’t seen a y/y increase in three-month rolling sales since late 2012! That’s 33 straight months! See the full report with a Bespoke Premium membership today.