Long-term investors in Caterpillar Inc. (CAT) saw a bull market gain of 207% from the stock's January 2016 low of $56.36 to its all-time high of $173.24 set on Jan. 16, 2018. Since then, the stock has seen bear market declines, primarily due to the global considerations of a trade war, tariffs, weaker worldwide economic growth and unfavorable currency conversions.

Caterpillar stock closed Thursday, Jan. 24, at $132.73, up 4.5% so far in 2019 and 18.4% above its Oct. 29 low of $112.06. Even so, the stock remains in bear market territory at 23.3% below the high of $173.10 set a year ago today. Caterpillar has a reasonable P/E ratio of 12.19 and a dividend yield of 2.61% according to Macrotrends.

Caterpillar reports quarterly results before the opening bell on Monday, Jan. 28, and analysts expect the construction and earth-moving equipment maker to post earnings per share of $2.99. The consensus is that mining and construction equipment sales should drive another earnings beat. Solid growth is also predicted for machinery, energy and transportation equipment. Charts seem to suggest that this optimism is priced into the stock.

The daily chart for Caterpillar

Daily technical chart showing the share price performance of Caterpillar Inc. (CAT)
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The daily for Caterpillar shows that the stock formed a "death cross" on July 17, 2018, when the 50-day simple moving average fell below the 200-day simple moving average, indicating that lower prices would follow. Investors following this signal sold strength to the 200-day simple moving average at $149.29 between Sept. 19 and Oct. 9, when this moving average failed to hold.

The stock closed 2018 at $127.07, which was the input to my proprietary analytics. The result is the four horizontal lines on the chart. My annual value level lags at $114.11, with my semiannual and monthly pivots at $125.40 and $129.83, respectively, and my quarterly risky level at $167.75.

The weekly chart for Caterpillar

Weekly technical chart showing the share price performance of Caterpillar Inc. (CAT)
MetaStock Xenith

The weekly chart for Caterpillar is positive, with the stock above its five-week modified moving average of $130.52. The stock is well above its 200-week simple moving average or, "reversion to the mean," at $105.47, last tested during the week of Nov. 11, 2016, when the average was $86.07. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 54.40 this week, up from 46.58 on Jan. 18.

Given these charts and analysis, investors should buy Caterpillar on weakness to my monthly, semiannual and annual value levels of $129.83, $125.40 and $114.11, respectively, and reduce holdings on strength to my quarterly risky level of $167.75.    

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.