Market Overview

Analysts: Caterpillar's Stock Could Be Front And Center In A Trade War

Analysts: Caterpillar's Stock Could Be Front And Center In A Trade War
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A potential full blown trade war could see mega-cap American giants like Caterpillar Inc. (NYSE: CAT) and Boeing Co (NYSE: BA) lose at least some of its business in China.

But that shouldn't deter investors from buying of these Dow components, according to Evercore's head of technical analysis Rich Ross Stacey Gilbert, market strategist at Susquehanna.

Ross: Technical Analysis

Caterpillar's stock continues to trade in the red for 2018 and dipped below its 200-day trading average for the first time in two years, Ross said Wednesday afternoon on CNBC's "Trading Nation" segment.

While this is certainly "not great," the stock is holding around a key support level around $141-$142. Taking a step back at the weekly charts, however, indicates Caterpillar's stock continues to hold near the 50-week moving average where it could see support and rally.

"I would be a buyer of Caterpillar on this weakness," he said.

Gilbert: Options Activity

The options market is also supportive of Caterpillar's stock, Gilbert said during the "Trading Nation" segment.

Specifically, notable put selling activity in Caterpillar options was observed, which may imply the stock is trading at a level where investors are "at a minimum comfortable buying the stock or suggesting they don't see it going much lower than where we currently are."

Caterpillar traded Thursday around $139.71.

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Posted-In: Dow Jones Industrial Average Rich Ross Stacey GilbertTechnicals Options Markets Media Trading Ideas Best of Benzinga


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