See Jim Jubak Wednesdays on CNBC's Business Center . Stocks will be busy jumping these first two challenges for most of October. Before equities are done with that task, though, they'll be getting ready to face the third and final set of hurdles. As the fiscal year draws to a close for institutional investors such as mutual funds, professional money managers will be selling their losers to offset profits and capital-gains taxes on any winners that they've sold this year. This last wave of selling pressure won't wash over every stock evenly, of course.
Some shares are likely to escape completely.
Others may sink just a little with the general ebb of the tide. I don't think its possible to come up with a magic formula that will tell us precisely which stocks belong in each of these three categories. Investors decide to sell stocks to generate tax losses after looking at a complex set of conditions that include when they bought the stock, how steeply it has fallen recently and projections of how well it will perform going forward. And investors make these decisions not just with an eye on their own portfolio and tax returns, but with constant adjustments based on what everyone else seems to be doing. In a climbing market there's no way to put together a list of stocks that are guaranteed to climb, but we can and do isolate factors that have, historically, increased the probability that a stock will go up.