When it comes to earthmoving, Cats are iconic.
The yellow Caterpillar brand continues to dominate earthmoving project works throughout the world. When I was building roads 35 years ago Caterpillar was the plant equipment of choice. It remains so now which is why the decline in the Caterpillar price from $105 to around $65 is significant in more ways than just for Caterpillar shareholders.
Caterpillar is the perfect proxy for the infrastructure build required to sustain the world economy. When economies are booming, Caterpillar is climbing. The sustained fall in Caterpillar prices indicates a sustained fall in infrastructure investment. This is not just greenfield investment in new infrastructure, road, and mining projects. It's also a decline in brownfields investment in the renewal of ageing infrastructure.
The key support level for Caterpillar is near $77. Early in 2015 this was a support level. In July the price slipped below support and then staged a weak recovery in August. After that the story is all on the downside.