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Swing Trade Idea (CAT) – August 12, 2022

Our bullish trade for Friday, August 12th is Caterpillar Inc. (CAT). CAT is part of the Industrial Sector, that CAT has underperformed against over the last month, and it is now showing signs of further improvement.

CAT has found support at a long-term key level of $181, and bounced higher on the retest. We therefore believe that CAT will continue to trade higher with the next resistance level being at $205. This provides a good risk/reward bullish entry. 

As a close, if CAT were to trade below $188 for multiple days, this would invalidate our analysis and will consider cutting losses on the trade. We also want to consider cutting losses on this options trade if the value of the vertical spread moves above $10.14.