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Caterpillar is under heavy pressure as the week comes to an end.  On Thursday shares fell 3.8% with the help of a big bump in volume.  This damaging breakdown pierced a key trendline that had linked the March/April lows.  The 50D moving average, which has provided solid support since September, also gave way under this extreme selling pressure.  CAT is off another 2.3% today as it dips below the April and May lows.  This is quite a reversal of the action earlier this month when the stock put in a new high for the year.  

We expect more downside in the near term.  Initial support is near $200(January high).  The 200D moving average, which has not been tested since the early August ‘Golden Cross”, is just below and is trending higher.  A week from now the 200D will be approximately $196.50.  

No position. 

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