CAT - Caterpillar shares should be sold on technical signals BTIG says

Caterpillar's ( NYSE: CAT ) shares should be sold based on recent trading patterns that tend to be riskier when markets are in a downward trend, analysts at BTIG said Tuesday.

Shares of the maker of construction equipment and heavy machinery in the past six weeks have formed what's known by market technicians as a "bullish pennant," when the upper and lower limits of their price range gradually narrow after a significant gain.

This pattern can signal future gains, especially when markets are in an upward trend. However, there are other indications that the stock will mover lower, according to BTIG.

"Aside from the fact that we believe we are still in a bear-market and false breakouts like what we saw in the [stocks of semiconductor makers] are more often the norm, weekly stochastics are very overbought," BTIG said. "We would fade Caterpillar ( CAT ) here as it looks to be out over its skis relative to both the SPX and Industrials broadly."

Caterpillar ( CAT ) has gained 45% since hitting a 52-week low of $160.60 a share on Sept. 27. The company reported a record profit during Q3 on strong demand and higher prices for its products.

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