As I mentioned last month, Caterpillar would be a pillar in which the bulls could stand upon. It just so happens that in the more recent times this pillar of strength has been sinking into the sand. I recall looking at CAT when it was priced at around $100 in mid January. Guess where it is today? My thought process for avoiding the purchase was that globally the economies were weak and the stock price of CAT would reflect this. Now we are four months into the bull market of 2012 and this CAT sits perched right where it started the year.
The sell off hit many hard yesterday and over the past week. The truth of the matter is we all saw it coming, many of us saw it coming for quite some time. What will give us momentum higher one direction or another is how the masses take the news. If this is merely more European mess that will be shrugged off because those across the pond will do anything to keep the union together and strong, then I would make my money on the shorts quick. If it is a concern for the global economies around the world, and perhaps the effects of a European recession of the greater intertwined global picture, I would be worried if I were bullish. Either way CAT is hinting at a weaker global economy and over the rest of the day I will seek to find more barometers to back up my bearish tale of woe.
I sit waiting patiently for the perfect moment to fire my VXX bull gun.