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Swing Trade Idea (CAT) – March 22, 2022

Our bearish trade for Tuesday, March 22 is Caterpillar Inc. (CAT). CAT is part of the Industrial sector that has reached a long-term resistance level at 103, as the market bounced higher from previous lows.

CAT recently moved into a key resistance area at $223. As this is a contrarian trade, we expect CAT to respect this level, which provides a good risk/reward neutral or bearish entry. Both 1M and 6M trends are bullish but are expected to turn neutral or bearish soon. 

As a close, if CAT were to trade above $230 for multiple days, this would invalidate our analysis and we will focus on cutting losses on the trade. We also will consider cutting losses on this options trade if the value of the vertical spread moves above $10.60.