So a CAT and a Deere were fighting in a field……who wins? Caterpillar (CAT) & John Deere (DE) are 2 possible companies to benefit from possible increases in infrastructure under the Trump administration.

This review will compare and contrast the stock charts between Caterpillar (CAT) & John Deere (DE). Since these stocks have a lot to do with infrastructure, let’s review both sets of company charts and look for possible trade set-ups.

Is the CAT fast enough to catch the Deere? Or does the Deere have a trick or two up its sleeve? Let’s find out!

Caterpillar (CAT) – 20 Year Chart

This first chart is a 20 year chart for Caterpillar (CAT) so I can get familiar with its past. Support and resistance lines can carry over for years and years, so always start big and then drill into the details.

Right now, Caterpillar’s (CAT) share price sits in the middle of the $81 support and the $106 resistance area from the overhead trendline. At current share prices, it is not the best risk to reward set-up at its current share price. However if Caterpillar (CAT) were to pull back towards the $[s2If !current_user_can(access_s2member_level1)]….

If you want to continue reading this article, which includes pullback price targets to watch for both Caterpillar (CAT) and John Deere (DE), then you must first login.

I use trendlines and Fibonacci tools in the rest of this update to calculate support areas for any pullbacks. These support areas are lower risk areas to jump into the trade.

If you are not a Trendy Stock Charts member, consider subscribing today! There are several different subscription plans available.[/s2If][s2If current_user_can(access_s2member_level1)]81 area, that could present itself as an excellent opportunity to make a scale-in purchase and go long shares. Another scale-in purchase would be made on any break below the $81 area and towards the $64 price area.

If you are currently long shares of CAT as it approaches its overhead resistance trendline, you will want to re-assess the MACD Histogram strength and actual buying volume as the share price approaches the resistance area. This will help determine if a breakout could be coming or not.

CAT – Rising Window Support Buy-In

This 2 year daily candlestick chart for Caterpillar (CAT) suggests a scale-in opportunity higher than the monthly chart. The $85 area appears to be strong support for Caterpillar’s (CAT) share price. That is right at the bottom of a Rising Window candlestick pattern support area. It is also right above the support area from another Rising Window candlestick pattern that developed between November 4 and November 7, 2016.

If the support area does not close during any re-test, the support area is probably a stronger one. But with another Rising Window candlestick pattern support area right below it, I am gathering that the $85 area should provide strong support.

The 2nd Rising Window candlestick pattern below only spans a width of $.07; this is a tiny, almost un-noticeable gap. This micro-gap should provide excellent support right under the $85 level.

John Deere (DE) – 20 Year Chart

This first chart is a 20 year chart for John Deere (DE) so I can get familiar with its past too. As mentioned above, support and resistance lines can carry over for years and years, so always start big and then drill into the details.

In November 2016, John Deere (DE) broke through some resistance that it was unable to before. The $95 – $100 range proved to be very stiff resistance through the years, until November 2016.

John Deere (DE) had a breakout that occurred on buying volume that was slightly higher than average trading volume for a week, a bullish sign.

But with DE’s share price currently sitting at its Golden Ratio for the current uptrend, what are the options if you want to go long? First and foremost, remember that just about every successful breakout has some sort of re-test of the breakout area. John Deere has not yet had that re-test of its breakout. Any re-test for John Deere (DE) should involve its share price pulling back below $100 and closer towards the $95 mark.

If I had to guess, I would imagine that any re-test of the breakout area is not attempted until after John Deere (DE) has its next quarterly earnings report. Especially since its MACD Histogram is still showing nice buying momentum on this monthly chart.

Let’s look at more recent price activity for John Deere (DE) in the next chart.

DE – Fibonacci Extension Tools

Zoom in on John Deere’s (DE) more recent activity on this next 2 year weekly candlestick chart. This chart has 2 different Fibonacci Extension Tools overlaid on it as well as 2 breakout areas. Both of these breakout areas could provide support in the event of a pullback.

By breaking through the black 161.8% Target Line, is DE’s share price suggesting it is moving towards the next stop, the blue 261.8% Target Line? I would say yes.

If DE’s share price was to push above the $111 area, the next overhead price target is the black 261.8% Target Line. The 261.8% Target Line falls around the $124 price target and is not shown on the chart.

This 2 year weekly chart suggests purchasing shares in the $100 – $104 range, a range slightly higher than calculated above on the monthly candlestick chart. With such a wide range, it will become important to monitor other indicators in order to try and get the best price during a pullback. Making scale-in purchases is another way to purchase shares at different levels within the pullback area.

Once the uptrend ends and a pullback starts, place a Fibonacci Retracement Tool on the uptrend and calculate the 38.2%, 50% & 61.8% retracement zones.

DE – Breakout From a Trading Range

This is a 10 year monthly chart. I’ve captured most of its trading activity over that period. The trading range is from the $70 area to the $95 area, resulting in a $25 trading range.

One way to estimate the breakout is to add $25 to the top of the Trading Range. $95 is the top of the Trading Range in the below chart.

A breakout of $25 added to the top of the Trading Range calculates to a $120 upside target price. This price target seems to suggest DE’s share price may continue running higher during this uptrend before its initial pullback. Maybe reaching for the $124

Caterpillar (CAT) & John Deere (DE) – Summary

In the battle of Caterpillar (CAT) & John Deere (DE), I would have to say that the Deere wins in the short-term. This is due to 1 stark, contrasting difference between the 2 charts. John Deere (DE) is making new all-time highs. Caterpillar (CAT) is 20% below its all-time high.

CAT appears to be in the middle of developing an extremely large Symmetrical Triangle chart pattern. CAT’s breakout from the Symmetrical Triangle chart pattern could lead to quick price gains, but the breakout does not appear close and could still be months away.

When having to choose between Caterpillar (CAT) & John Deere (DE), the choice is clear for the short-term.

However for now I would play the momentum for John Deere (DE) to the upside as it continues to make new all-time highs. It has broken out of a long, multi-year top. This breakout could take its share price all the way to $120 – $124 area, where I would advise locking in some profits for the short-term. Any dips to the $100 area before DE’s anticipated run-up are opportunities to make a scale-in purchase and go long shares of DE.

If you are aggressive, make a 1/3 scale-in purchase for DE and go long now. Trade your way up to the $120 – $124 potential upside target price. If you are less aggressive, wait for a pullback to the $100 area and go long then. Any pullbacks to this area represent an excellent opportunity to make a scale-in purchase and go long with shares of John Deere (DE).

If Caterpillar (CAT) does pullback to the $85 area before reaching its overhead resistance trendline, that could be a decent opportunity for a scale-in purchase to go long with a $105ish price target. However, until it can break through its overhead resistance area, any significant increases for its share price may be capped. Once CAT’s breakout does happen though, jump on board quick.

[/s2If]

Company / Topic
Clear Charts
Article Content
Summary