The arguments today also extend to MasterCard (NYSE: MA) and American Express (NYSE: AXP) to some degree. This is an extremely exciting industry which is bleeding into crypto. Fintech is a fan favorite on Wall Street for good reason. In fact, of the three today, I like it the best for the long term. Second on our list is Visa, and it’s just as strong as CAT.
If it doesn’t happen, then there would be no harm in trying. My note today is to try and avoid a big potential let-down. April was the first red one since the 2020 crash. Coming into last month, the stock had 13 monthly green candles in a row. Caterpillar had a similar run from April of 2016 that ended in a big correction two years later. My thesis has support stemming from looking at the monthly chart. In fact, this is how normal price action unfolds. If I am right, CAT stock could be ready to fall and retest $200 per share. There could be signs of exhaustion that the bears are ready to take the reins for a bit.
But this time there is a good chance that it’s different. Usually this is good news for the bulls because they can use it to build new foundations. It finally bottomed with the Covid-19 crash, and then the magic started.ĬAT stock rallied 174% where it sits now.įor the last two months, Caterpillar has been consolidating in a sideways action at its highs. In January of that year the stock started a terrible descending channel. Going into 2020, it had struggled to regain its highs from the 2018 correction. In spite of the global struggles from the pandemic, 2020 turned out to be a great year for CAT stock. Meanwhile here are the three mega-cap stocks to fade for the next couple of weeks. Follow-through this week will be crucial to watch. If you cannot rally on good news than there might be some selling ahead. Big tech names, including Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT), reported blowout earnings. The Nasdaq for example could not rally on excellent news. These make for good times to book profits and prepare to reset for another run.Īll stocks have to trade within the market collective. Regardless of how much I like a stock, I expect it to have temporary weaknesses. Over decades of investing, I’ve learned to not overstay my welcome in winning trades. They say to not fight the tape, so we’re merely attempting to take advantage of temporary weaknesses within strength. Don’t mistake this for a reason to short the companies outright - they are doing well. Today’s call to fade stocks from these high levels is not a criticism of their fundamentals. It is a short-term, knee-jerk reaction to the earnings as a coin flip. This does not reflect on Amazon’s future. Yet, the stock could not hold its greens and closed red for the day. It had an incredibly strong quarter with absolutely no disappointments. The most recent sign of exhaustion was the reaction to Amazon (NASDAQ: AMZN) stock on Friday. Nevertheless, the rally has gone too long and there are mega-cap stocks to fade up here. If that was the case then more than 90% of all earnings reactions would be up. The mistake that most investors make is to expect good reactions to good reports. All companies, and maybe especially those with large capitalizations, are trying to look their best. This is the opportunity for management teams to report on their progresses and challenges. The earnings season is always an interesting time to reflect on investment ideas.