Caterpillar (NYSE :), producer and supplier of heavy equipment for construction, agriculture and mining, among others, is increasingly looking to fall victim to the trade war between the United States and China. And as the hope for an agreement diminishes and diminishes, the messages from officials on both sides of the dispute do not seem hopeful.
U.S. Pat. Commerce Secretary Wilbur Ross said yesterday that he does not expect a trade resolution, even though President Donald Trump and Chinese President Xi Jinping are meeting this month at the G-20 summit in Osaka, the Wall Street Journal said. The South China Morning Post also reports that Caterpillar may be subject to stricter Chinese safety and environmental assessments if the country returns to US rates, says former trade minister Wei Jianguo.
Caterpillar expects to lose between $ 250 and $ 350 million on current rates as early as 2019, even before "stricter Chinese safety and environmental controls" are performed. This negative outlook is already reflected in the technical graph of the share
The shares of the industrial giant have already disappeared from the rising channel – where both buyers and sellers agree that prices should be higher – since the 50 DMA (green) fell below 200 DMA (red), which created a Death Cross. Wall Street regards this as the most frightening technical trigger, because it shows prices decrease. The prize attempted to climb back into the channel, but was overlooked and pushed back.
Trading Strategies
Conservative traders must wait for a second low below the $ 31.41 lowest level to complete a downward trend before shorting, or for a new set of rising peaks and troughs, after the $ peak 18.17 for a long position.
Moderate traders may run the risk of being below $ 125 for a short period of time – both because of the psychological breakthrough and because of clearly identifying a peak. Then they could wait for a pullback for better access.
Trade sample
Listing: $ 125
Stop loss: $ 126
Risk: $ 1
Target: $ 122
Reward: $ 4
Risk-Reward Ratio: 1: 4
Aggressive traders can shorten their will, provided they understand the risks and conclude that their long-term goals can withstand such potential losses.
Trade sample
Input: $ 128
Stop loss: $ 130, round number and higher than the June 11 summit
Risk: $ 2
Target: $ 122, above congestion at the end of May-beginning of June and the round number of $ 120
Reward: $ 6
Risk-Reward Ratio: 1: 3
