Caterpillar Inc. (NYSE:CAT) shares have moved into overbought range as the 14-day RSI reading reached 80.42 after the recent close. Investors should be cautious of taking positions as this might indicate the stock is due to reverse course. RSI or Relative Strength Index is a momentum indicator that technical investors use along with other factors in trying to determine the short term direction of a stock. The RSI can help pinpoint stock reversals and help coordinate taking positions accordingly. The RSI takes the closing prices of a given stock over a 14-day period (typically) and calculates a ratio of the number of higher close days to the number of lower close days. With Caterpillar Inc. (NYSE:CAT) shares passing the 70 level, the stock is now considered to be in overbought territory and ripe for a potential pullback.
Caterpillar Inc. (NYSE:CAT) shares have traded 2.14% for the week and are 38.23% for the year. At the time of writing, the stock is trading at $128.19, a change of 1.03% from the previous close. In terms of volatility, the average daily high/low percentage range stands at 0.86% for the week and 1.01% for the month.
So, most importantly, where are shares headed from here? In order to get a sense of Wall Street sentiment, we can look to brokerage analyst estimates. On a one to five ratings scale where 1.0 indicates a Strong Buy, 2.0 indicates a Buy, 3.0 a Hold, 4.0 a Sell and 5.0 a Stong Sell. Caterpillar Inc. currently has an average analyst recommendation of 2.50 according to analysts. This is the average number based on the total brokerage firms taken into consideration by Beta Systems Research. The same analysts have a future one-year price target of $124.78 on the shares.
In addition to sell-side rational, we can also take a look at some technical indicators. The stock is currently 7.90% away from its 50-day simple moving average and 23.00% away from the 200 day average. Based on a recent trade, the shares are 0.87% away from the 52-week high and 59.58% from the 52-week low.