Four Reasons Why the Stock Market
Will Rise in December

My fellow financial editor, Robert Appel, BA, BBL, LLB, sent the below e-mail alert yesterday. I feel it important to share with my Profit Confidential family of readers:

“As we move into the last month of the year, we want readers to know that, on a balance of probabilities, December should perform and put some cash in our pockets. While there are no guarantees—indeed, catastrophe looms daily in world events—these are our reasons why we believe December will be a good month for investors:

“The stock market had started to rally in the fall and was derailed by Europe. However, one often hears that the stock market, like a horse, ‘prefers to move in the direction it was already headed.’ Since the European Union must (repeat MUST) define their solutions in December (holiday or no holiday), we would expect further strengthening, not weakening, assuming the EU can maintain a united front (itself a big supposition, of course).

“Secondly, the bankers (who most of us just found, to our shock and horror, really do rule the world—and make the politicians jump to their commands, it seems) traditionally need a strong December/January to move money around, mop up unused pension funds, and clean up balance sheets. And then pay themselves their typically outrageous year-end bonuses. So they are motivated.


“Thirdly, as for the mining sector, we have noticed that the ‘gold whackers’ like to play both sides of the fence. That is, even though the gold whackers make most of their cash by shorting for their clandestine ‘clients,’ every now and then, they will mix it up by going long after a big short, then ‘standing aside’ to let gold’s natural momentum move it up, taking their profits, and starting shorting anew at higher levels. We think this could be the pattern in December.

“Finally, by now everyone and their brother understands that, at current gold bullion prices, the gold mining stocks are trading at valuations (depending on which chartist you listen to) between 10- and 30-year lows. When the common wisdom actually reaches the common people, usually paradigms will finally shift. The chance to load up on the gold miners at bargain prices is coming to an end, we think.”

(Also see: 10-year Strategy of Buying Stocks When Gold Bullion Moves Lower in Price Still Working)