Wyckoff’s Third Law In Action As Caterpillar Jumps Higher As Expected

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Caterpillar stock daily chart

Caterpillar (CAT) is another of my bullish stocks from way back to 2016, and one which continues to deliver, closing as it did last week at $229 per share with a solid up candle on the daily chart following a period of congestion between $215 and $220 per share. This example of price and volume is a classic of Wyckoff’s third law, which enshrined his approach to trading and investing. Put simply it is the law of effort and result. If you put plenty of effort into the price, then you should expect a good result, and this is precisely what we have here. A widespread up candle with no wicks, and associated with excellent volume.

So, what can we conclude from this straightforward analysis? Two things. First, this is a genuine move as the market makers are participating. Second, and following from the first, we can expect to see the trend develop in due course, and more so as we are approaching an area of low volume on the volume point of control (VPOC )histogram. We can also expect to see some from profit-taking on this move, but longer-term the stock remains bullish and set to deliver on a tide of Democratic infrastructure spending.

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