NEW YORK ( TheStreet) -- And just like that, stocks are right back where they were before Ben Bernanke and the Federal Reserve rode to the rescue with QE3 less than a month ago.

It's seem the central bank's generosity is inspiring investors to take profits rather than risks.

The rationale is pretty easy to understand. All three major equity indices began the day up more than 10% in 2012, not a bad year by any stretch, especially when you consider the S&P 500 was basically flat in 2011 and the Nasdaq finished nearly 2% lower.

At their peaks in late September, taking some money off the table had to be tempting, especially with what even then promised to be a dismal third-quarter earnings season looming and the uncertainty of the presidential election and fiscal cliff waiting to complicate the end of the year.

After all, if you're not going to cash in at multi-year highs, when the Fed has already promised to pull out all stops (meaning there's no more rabbits to pull out of the hat), when are you going to cash in?

This week's mutual fund flow data from the Investment Company Institute showed plenty of folks came to a similar conclusion as investors yanked a whopping $10.6 billion out of long-term funds investing in U.S. equities. The outflows are nothing new but that figure is still striking, totaling more than the previous two weeks combined and more than half of the $18.5 billion in total outflows for September.

Sam Stovall, chief equity strategist at S&P Capital IQ, is still positive about stocks for the remainder of the year and he chalked the sharp drop of late up to nervousness about just how bad earnings season will be.

"Investors have recently adopted a 'wait and flee' attitude toward equities ahead of the Q3 EPS reporting period, which intensifies next week," he said in emailed commentary late Wednesday. "Despite a lessening of the projected y/y decline in Q3 S&P 500 results, according to Capital IQ consensus earnings estimates, share prices have fallen as Wall Street waits for, among other things: 1) Spanish elections and a possible subsequent request for financial aid, 2) U.S. managements' guidance and the possibility that Q3 represents a trough in the EPS slowdown, 3) the U.S. presidential election, which has heated up since the recent debate, and 4) the likelihood of a pre-2013 resolution to the fiscal cliff. We continue to believe equity prices will advance into year-end as successive issues are resolved."

That's a full plate of issue to resolve in a little less than three months and some of Stovall's optimism stems from positive technical trends.

"U.S. equity indices are approaching huge chart support, so we think that most of the damage is almost over," he said. "Once the pullback ends, we see new recovery highs with the S&P 500 heading up toward all-time territory in the 1,550 to 1,580 region, which is major chart resistance from the 2000 and 2007 highs."

The bulls out there are no doubt hoping he's right but the bears might argue the charts alone won't turn the trick. Lest we forget, Europe remains a big fat question mark as evidenced by Standard & Poor's moving to downgrade Spain's long-term credit rating to a notch above junk after Wednesday's closing bell.

As for Thursday's scheduled news, Safeway ( SWY) is reporting its third-quarter results before the opening bell, and the average estimate of analysts polled by Thomson Reuters is for a profit of 42 cents a share in the September-ended period on revenue of $10.24 billion.

Shares of the Pleasanton, Calif.-based grocery store operator are down nearly 10% in the past year, peaking with a 52-week high of $23.16 on Feb. 21, as the company struggles to grow the top line and increase same-store sales.

Safeway has beaten Wall Street's profit expectations for the past six quarters but an in-line performance in the third quarter would be a comedown from earnings of $177.6 million, or 50 cents a share, on revenue of $10.39 billion in the second quarter. The company's current guidance is for earnings of $1.90 to $2.10 a share for the full year with identical-store sales growth of 1%-2%, excluding fuel.

The sell side is mostly negative on Safeway with 15 of the 21 analysts covering the shares at either hold (9) or underperform (6) and the 12-month median price target at $17 vs. Wednesday's closing price of $16.29.

Cantor Fitzgerald previewed the report on Tuesday, saying it's slightly below consensus with an estimate for earnings of 41 cents a share and that it sees identical store sales up 1% for the quarter, excluding fuel. The firm has a sell rating and $14 price target on the stock.

"While there remains considerable uncertainty regarding the Just 4 U a store loyalty program rollout and its impact on customer traffic, we think the main scrutiny in 3Q should be on the operating income level," wrote Cantor analyst Ajay Jain. "In addition to the sales impact of Just 4 U, the spending associated with the program could also weigh on profitability."

Jain also highlighted worries about Safeway's balance sheet, mentioning this may be the motivation for the company's Sept. 5 announcement of plans for an initial public offering of a minority stake in its Blackhawk Network Holdings prepaid gift card business.

"We estimate that Safeway's total Debt/EBITDAR earnings before interest, taxes, depreciation, amortization and rent for 2012 is already at the critical 4.0x threshold for the rating agencies (above which it is unlikely to maintain its investment grade rating)," he wrote. "Based on what we view as a deteriorating FCF free cash flow situation and increased balance sheet risk, we believe the main rationale of the planned Blackhawk IPO could be to shore up much needed cash to pay down debt."

Check out TheStreet's quote page for Safeway for year-to-date share performance, analyst ratings, earnings estimates and much more.

Other companies slated to report on Thursday include Emmis Communications ( EMMS), Fastenal ( FAST), J.B. Hunt Transport Services ( JBHT), Sycamore Networks ( SCMR), Winnebago Industries ( WGO), and Zep ( ZEP).

The economic calendar features weekly initial and continuing jobless claims at 8:30 a.m. ET; trade balance data for August at 8:30 a.m. ET; export and import prices for September at 8:30 a.m. ET, and weekly crude inventories at 11 a.m. ET.

This weekly initial claims number is likely to get more attention than most after the improvement in the September jobs report. The consensus is calling for claims to tick up to 370,000 from 367,000 in the prior week, according to Briefing.com, whose own forecast is a bit worse at 375,000.

And finally, Ruby Tuesday ( RT) was a big loser in late trades on Wednesday after the Maryville, Tenn.-based restaurant operator reported an in-line profit for its fiscal first quarter but gave an outlook that hints at some downside to Wall Street expectations for the full year.

The company said it sees earnings excluding items of 24 to 34 cents a share for its fiscal year ending in May with same-restaurant sales projected between flat and up 2%. The current average estimate of analysts polled by Thomson Reuters is for earnings of 28 cents a share. The stock was last quoted at $6.57, down more than 6%, on volume of nearly 450,000, according to Nasdaq.com.

-- Written by Michael Baron in New York.

>To contact the writer of this article, click here: Michael Baron.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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