Year-end rally not out of the question

As we near the end of 2012, these companies may elicit a rally before 2013 becomes a reality.

By Benzinga Nov 19, 2012 4:54PM

Image: Arrow Up (Nicholas Monu/iStock Exclusive/Getty Images)By Ken Shreve, Benzinga staff writer


Could it possibly be? At a time when headlines are dire, are major averages on the verge of a rally into the end of the year?


It's too early to say at this point, but deviant markets tend to rally when it's least expected so be open to the possibility.


Monday marked the second day of a rally attempt for the indices after a bullish session Friday that saw major averages finish near session highs. Volume came in higher than Thursday but was skewed somewhat by options expiration. Still, it was a solid session all around. A big percentage gain for the major averages in higher volume on the fourth day or later of the rally attempt would be a legitimate buy signal and confirmation of a new uptrend.


Don't forget it's a shortened week of trading this week. The market will be closed Thursday for Thanksgiving, with a half day of trading on Friday. It'll most likely be a quiet week volume-wise, but three high-quality names with outstanding fundamentals report earnings this week. Strong results could result in renewed buying demand.


Headed into Monday, Chico's FAS (CHS) was only 9% off its recent high. The women's retailer reports earnings Tuesday before the open. Its weekly chart shows some erratic price swings recently which has weakened its technical picture, but there's still a chance for a solid quarter because it's a well-run company with a consistent track record of execution.


In August, the company reported profit of 28 cents a share, up 32% from a year ago. Sales rose 16% to $641.7 million. Sales at its Chico's/Soma Intimates rose 11% to $415 million. White House/Black Market increased 10% to $194 million.


This time around, quarterly profit is expected to rise 22% to 22 cents a share with sales up 18% to $644 million.


Meanwhile, cloud computing and customer relationship management bellwether Salesforce.com (CRM) reports Tuesday after the close. It's expected to earn 32 cents a share, down 6% from a year ago but look for another strong quarter of top-line growth with sales up 33% to $776.5 million. Salesforce.com has always sold at a premium valuation but it's deserved because of blistering growth. Annual earnings growth is expected to slow a bit this year, up 7% from 2011, but accelerate in 2013, up 33% from 2012.


The stock's recent pullback has been fairly well contained. Headed into today, it was only 12% off its recent high. It could start building the right side its base soon if new money starts to come in from the sidelines.


Finally, agricultural equipment maker Deere & Co. (DE) has climbed to within 5% of its 52-week high and continues to hold gains nicely ahead of its earnings report Wednesday before the open. Most of its recent gains have come in average or below-average volume which means that institutional investors have not been the fuel behind the buying.


Still, its relative price strength lately says the market's expecting a strong quarter. The consensus estimate calls for profit of $1.88 per share, up 16% from a year ago. Sales are seen rising 12% to $8.8 billion.


More from Benzinga


7Comments
Nov 21, 2012 12:11AM
Nov 20, 2012 7:00PM
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Carl does need new glasses or a different outlook on life.?
Nov 20, 2012 11:11AM
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Year end Rally ? Don't think so ! Smart Money/Big Boys have left the House ! Small Investors will lose ! Take your Money and Run !!
Nov 20, 2012 9:01AM
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As long as our gov continues to feed the market with printed money...anything is possible.  The market is nothing more th****galized rigged ponzi scheme being manipulated by those select few in control.

It is time for Wall Street and banking reform.

Nov 19, 2012 10:59PM
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When I read the head line I thought it said "Rear-end rally not out of the question", so I said "Sure, that could happen."  Butt in looking closer, I am not so sure.
Nov 19, 2012 9:52PM
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When this fiscal cliff non-sense is fixed the market will go thru the roof.
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