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Is CAT Stock Bottoming?

AP

Caterpillar quickly turns positive: is the stock bottoming?

CAT shares took all of 20 minutes after the opening to turn modestly positive on heavy volume, despite a cautious outlook on 2013:

"We are taking a pragmatic view of 2013—we're not expecting rapid growth, and we're not predicting a global recession," CEO Doug Oberhelman said in the company's earnings release. (Read more: No Recession, but Plenty of Uncertainty: Caterpillar CEO)

This is very positive action. Remember, CAT lowered full year 2012 guidance, revenues are now at the lower end of expectations, and they are talking 2013 sales flat (Europe weak, modest rebounds in Brazil/China).

(Read more: Caterpillar Earnings Beat, but It Cuts Full-Year Outlook)

This, apparently, is not a huge surprise to the Street.

Almost a third of CAT's sales are in mining equipment, so a rebound in China/Brazil is crucial to even a flat outlook (Asia and Latin America are about 40 percent of revenues).

A couple points:

1) there's been a big bounce in coal stocks this morning as Peabody reported much better than expected earnings, gave a fairly bright outlook for 2012 as well.

And Freeport McMoRan also beat. Steel and iron ore stocks are trading up today.

2) CAT has proven to be an outstanding bellwether of the global economy: it telegraphed a slowdown better than any other stock this year. After peaking at an historic high of $116.95 in February, it quickly dropped 30 percent before bottoming at $78.25 on July 12. Since then, it's been mostly between $80 and $90.

Bottom line: the stock looks like it has a strong base at around $80. Rising on cautious outlook very positive.

My guess: the stock is likely under accumulation by early bulls looking to play a 2013 rebound. (Read more: Stocks Struggle for Direction; CAT Rebounds)

—By CNBC's Bob Pisani

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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