Awareness Is Critical To Trading Success

I'm sure there are some traders who find success by "flying by the seat of their pants".

But most of us need education, patience, and perhaps above all else, awareness. I suppose there are plenty of ways to describe or define awareness, but one such way is simply to see things developing before they actually happen. Every time I've given a MarketVision forecast at the beginning of the year, I've used awareness to some degree. In the following example of Caterpillar (CAT), there is no positive divergence in play......yet. But if CAT were to move lower one more time, there's a reasonable chance that one could print:

Enter Caterpillar, Inc. (CAT):

Currently, CAT is bouncing off price support near 215. There's a reasonable chance it'll continue its advance to perhaps 225. That's the most recent (a week ago) price resistance and the declining 20-day EMA is at 227. CAT could bust right through both, but I'd say the odds favor at least a temporary pause there. I'm seeing the PPO just starting to turn up (blue circle). If you look back to July 2022, you'll see a similar setup in early July. The PPO just began turning up. On the very next price low, a positive divergence printed and CAT rallied 20% over the next month. I don't see a trade with CAT right now, but setting a "price alert" at StockCharts at 210 makes good sense. If it triggers, it could signal an excellent buying opportunity, but that call would need to be made then.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.