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CAT None

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Caterpillar - CAT - close: 90.90 chg: +1.25 stop: 89.00

Company Description:
For 80 years, Caterpillar has been building the world's infrastructure and, in partnership with our independent dealers, is driving positive and sustainable change on every continent. Caterpillar is a technology leader and the world's largest maker of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. (source: company press release)

Why We Like It:
We like CAT as a bullish candidate because it looks like the stock has put in a short-term bottom. Actually if you look closely at the daily (or better the hourly) chart you can see an inverse or bullish head-and-shoulders pattern. Yet traders need to keep in mind that as a Dow component the success of any bullish play in CAT will depend heavily on the Dow Industrial average breaking out over resistance near the 10,400 level. The company reported earnings on April 20th and blew past the estimates. Plus the company guided higher. If shares can trade above the $92.00 level it will reverse its P&F chart into a new buy signal. A move above $92.00 will also break the neckline of its H&S pattern. We are suggesting that readers waiting for CAT to trade above its 100-dma currently at $92.30. We'll use a trigger at $92.35. Our six-week target will be the $99.25-100.00 range.

Suggested Options:
We are suggesting the June calls.

BUY CALL JUN 90.00 CAT-FR OI=3198 current ask $3.30
BUY CALL JUN 95.00 CAT-FS OI=2094 current ask $1.15

Picked on May xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 04/20/05 (confirmed)
Average Daily Volume = 2.8 million
 

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