CAT

Cat is another position I started building, it's already at a profit, but I don't really care about the short term here. For a large cap, CAT has a good Beta of 2.0, it's a good choice for large cap and Industrial coverage, it also should be liquid if you are considering long term puts.

 Although the volume spike is not exactly where I want to see it, considering market conditions this could be reliable as a short term reversal as you can see these spikes have acted a reversals in the past. I'd prefer to have seen CAT close higher, but it is off its lows for the day. The downtrend channel is well defined, any head fake move will target a break above that channel and probably somewhere in the $155 area, at least that's where I'd want to start looking at it.

 The 60 min chart is getting more negative as the divergences are getting longer.

 Here's the 15 min negative divergence that turned CAT down from resistance at the channel, this is where retail shorts would be jumping in, on a failed test of resistance, so a shakeout move would have to be above the channel and we just so happen to have a small positive leading divergence on the 15 min.

 You can see it is sharper on the 10 min as it should be as the shorter timeframes feed the longer ones.

This is not exceptionally strong, but enough to break above the channel.

And the 5 min is even stronger, note the positive divergence right at the lows of the day.

Make sure you check out the earlier BIDU and BEAV post for additional targets on those trades.