Big Green Tractor in a Big Green Range

One of the more interesting events over the summer, which we discussed back then in real-time on this website, was that John Deere was making fresh highs while Caterpillar, another large cap ag machinery play, was teasing multi-year lows. 

We surmised that something had to given with this spread between CAT and DE, and it was more likely than not that CAT would contain if not pull down DE. 

Within a matter of weeks, DE suffered a swoon to 52-week lows, and CAT has remained fairly weak, the essence of how bifurcation typically resolves. 

After earnings, though, DE is bouncing back today, perhaps indicative of its intent to hold a multi-year range going back to 2011, in the low-$70s. 

As it stands, to extrapolate further it is now likely that DE must hold this range if many commodities are going to be bouncing or putting in some type of good lows. 

While it may seem like a stretch to key off DE or CAT for such broad statements, I would add that keying off JOY, the large cap coal machinery play, has enabled Members to avoid the pain of picking bottoms in the coal sector for now.