Caterpillar Hits 52-Week High; What Now?
NEW YORK (
) --
Caterpillar
(CAT) - Get Caterpillar Inc. Report
shares rose to another new 52-week high Tuesday, with bullishness surrounding the stock on technical grounds, and as the
Federal Reserve
breathed life into equities markets
broadly with its suggestion that it could provide added support to the economy with quantitative easing, if needed.
Trading on Monday represented a breakout session for U.S. stocks and, in response, investors sought out the bluest of the blue chips, including Caterpillar, said Mike Bellafiore, a partner and trader at
SMB Capital
in New York. When the stock leapt on Friday above $72 -- a longer-term technical support level -- and then above $75 on Tuesday, "those who feared being left behind propped up CAT to new highs," he said.
So where to go from here? It all depends on whether you believe Monday's breakout will hold, Bellafiore said. If yea, buy or sit tight. If nay, take profits.
Caterpillar, meanwhile, has been dumping good news onto the market. Last week,
Caterpillar released August retail sales numbers
that showed the quickest monthly growth for the company in more than a year, especially in its Latin American and U.S. markets.
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And then, on Monday, the Peoria, Illinois-based manufacturing bellwether announced a $640 million five-year deal with the Pentagon to supply tractors and scrapers to the Marine Corps and the Army.
Caterpillar also announced recently that it had acquired what had been an automobile plant in Brazil, which it will use to make backhoes and other smaller gear. It's also breaking ground on a
in Victoria, Texas, which will require 500 new jobs.
In July, when it released second-quarter results, Caterpillar tweaked its guidance in a positive direction, based largely on sales to the mining industry, analysts say. Mineral extractors have been expanding mines and bringing moth-balled assets online, betting that there will be no double dip.
Caterpillar's core construction-equipment business remains a sore spot, but stimulus spending on infrastructure could aid the company's prospects there.
Caterpillar shares ended Tuesday's session on the
New York Stock Exchange
at $76.38, up a little more than 2%, after earlier touching $77.11, a new hear high. Volume was heavy, exceeding 12 million shares, compared with average daily turnover of about 8 million.
-- Written by Scott Eden in New York
RELATED STORIES:
>>Caterpillar Retail Sales Jump in August
>>Caterpillar Touts New Texas Plant
>>Caterpillar Recovery Draws Worrywarts
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