In trading on Thursday, shares of Caterpillar Inc. (NYSE:CAT) entered into overbought territory, changing hands as high as $100.49 per share. We define overbought territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be overbought if the RSI reading rises above 70. In the case of Caterpillar Inc., the RSI reading has hit 70.5 — by comparison, the RSI reading for the S&P 500 ETF (SPY) is presently 70.0.
Investors could look at CAT's 70.5 reading as a sign that the recent heavy buying is overdue to take a break, which could bring a pullback in the stock. The chart below shows the one year performance of CAT shares:
Looking at the chart above, CAT's low point in its 52 week range is $67.54 per share, with $116.55 as the 52 week high point — that compares with a last trade of $100.36.
CAT operates in the Construction sector, among companies like Shaw Group Inc. (SHAW) which is up about 0.8% today and has a current RSI reading of 72.2. Below is a three month price history chart comparing the stock performance of CAT, versus SHAW.
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