Caterpillar (CAT) doesn’t sound like a terribly exciting stock, but it deserves some attention around earnings time.

For the past two quarters, the shares have added more than 20% in the two weeks following earnings. Expectations among analysts are low this quarter, as the consensus calls for a 95% decline in profits from a year ago. That compares favorably with the average 40% drop over the past four quarters.

On the charts, the stock has been bounding higher, using both the 20-day and 50-day moving averages for support. Now the shares are poised to take out their 2009 and 52-week highs just below the $55 mark. A move above $55 would be a very bullish indicator 

The major attraction of CAT, however, is signs that pessimism toward the shares is unwinding. Only eight of 23 analysts currently rate the stock a “buy.” But, according to Zacks, that’s double the number of buys from a week ago.

Keep in mind that pessimistic sentiment reflects lower expectations that often lead to upside earnings surprises. (Conversely, optimism represents higher expectations and, thus, can create some vulnerability if those expectations aren’t met.)

Short interest is coming off an annual high, suggesting that some of the shorts are buying to close their positions. And the put/call ratio is nearing a high that marked peaks in April and June. 

All these indicators point to a groundswell of optimism that could help the shares break above the September high.

CAT reports Oct. 20 before the open, so we have a little time to see whether $55 holds.

A break would be helpful for a bullish trade, but a pullback to the 20-day wouldn’t hurt either.

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