Friday, May 04, 2007

Stockfest: More Than a Dead CAT Bounce

My recent post found a breakout in money flow and price in VZ. Above we see a chart for Caterpillar (CAT; blue line) going back to January, 2006. Note the large drop on very negative money flow (pink line) in October, 2006. After that point, CAT price stabilized on positive money flow.

Following the February bottom, notice that we saw solid upward spikes in money flow and only occasional, muted negative readings. During the late February/early May selloff, we never saw sustained negative money flow in CAT and we held well above the late 2006/early 2007 price lows.

Most recently, money flow has spiked even higher, and we're making strides toward testing the 2006 highs. The drying up of selling in CAT following the spike downward, the ability to hold lows on market weakness, and now the new dollar inflows make this a continued stock to watch.

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