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Swing Trade Idea (CAT) – October 05, 2023

Our bearish trade for Thursday, October 5th is Caterpillar Inc. (CAT). CAT is part of the Industrial Sector, which has performed at -6.51% over the last month, with CAT performing at -5.89% over the same period.

CAT is pulling back from an all-time high price, and it broke below a key area of support at $267. As strength is declining, we expect to see further downside with the next support at $235. CAT is trading in unison with its sector, which confirms our bearish bias.

As a close, if CAT were to trade above $270 for multiple days, this would invalidate our analysis and we will consider cutting losses on the trade. We will also consider cutting losses on this options trade if the value of the vertical spread moves above $12.74 Debit.