Money Daily consulted the pros to see what investors should expect in the coming weeks. To help you navigate the shoals of year-end shifts and downshifts, we've compiled a Christmas list of reasons why stocks just might be in for a swoon as Santa heads for a snowy rooftop near you. What goes way up, must come down. Even given last week's minor pullback, the market's been going gangbusters for nearly two months, and a large number of individual stocks have inflated to speculative levels. People take profits, the buying psychology gives way to selling.
Narrow breadth equals a fragile rally.
Several pros Money Daily consulted took particular note of how few stocks are responsible for the fall rally. Look for big selling on the big, best-performing stocks throughout December, and when that happens they'll pull other stocks right down with them. In an even more cheerful reminder, Joe Abbott, director of equity research at earnings tracker IBES says that the pre-announcements start coming in hot and heavy around Christmas week. End of year tax-loss selling. Even though the market indexes are showing strong gains, many stocks and stock mutual funds are still down for the year, and that means many small investors will be selling, if only to offset the realized gains from their winning holdings.