CAT - still a very large bear flag

Caterpillar (CAT) remains within a giant bear flag, and price action is still very weak. This is despite the main indexes a mere 1% from the mid September spike high of sp'1474.


CAT, daily

Summary

With the transports closing badly in September, and the underlying econ-data increasingly warning of a US recession in late 2012/early 2013, CAT is clearly one stock that is actually reflecting reality.

First downside target is a break of the flag, by end October, bears should seek somewhere in the 84s, although it will be a lot more decisive with a break of the July low <$80.

Only with a clear break over 97.50 - and preferably the big $100, could bulls justifiably get bullish on this engineering monster.

CAT remains a good company, but near term, the outlook remains very suspect.