Trade Idea-CAT (short) and Large Cap analysis

Cat is the #2 weighted stock in the Dow-30 at 6.34%, only behind IBM. I'll probably be entering a partial short position in CAT when I have a spare moment in the model portfolio, an equity short. I have a feeling I will not get the best price, but I have to get trades in where I can considering I have more important responsibilities to my members.

So here's CAT, which is a follow up of the Dow post and Large Caps in general.

 CAT has a descending channel making lower lows/lower highs or better known as a downtrend. Since the April 10th volatility shakeout, the most obvious resistance line (the top of the channel) has been broken, there's you short shakeout-what we expected. A failure of this "head fake" move should give CAT extra downside momentum when it breaks back in to the channel and I suspect it will probably bust through the bottom channel.

 The 60 min 3C chart has followed the trend very well, it has gone negative at all the bounces in the channel and it is leading negative at the break above the channel. For 3C just to confirm the move, it would have to be higher than where the last red arrow starts, it is not, so this is what we expected, distribution in to price strength.

 The 30 min chart confirms the same as it goes negative in to CAT's bounce highs.

 The 15 min chart should show a sharper negative divergence and it does, CAT's 3C 15 min chart is now leading negative below where the bounce started on April 10th-again this is a huge negative divergence.

 Now, here's where it gets interesting and seems to back up the beginning of the DIA post, despite that 15 min chart driving me crazy. We have a short term intraday 5 min positive divergence here, this "could" very well be used in a move up tomorrow on the options expiration pin that if it goes as suspected, would see the SPY around the $140 area (at least as of yesterday's open interest).

The 2 min chart is showing a sharper positive divergence as it should being a faster timeframe. This seems to go along with what I laid out in the DIA post about there being 1 last run tomorrow on an options expiration pin.

I will be looking for an opportunity (mostly time) to start a position (short) in CAT, it won't be a full position as I would have to leave room to add on a potential bounce either today or tomorrow, but at least I will have some coverage and as the market is probably going to be moving faster and faster as we move toward tomorrow, it may be the only chance I get to start a position here.