Here is why it ordinarily is so strong. In mid-December, tax-conscious investors look through their portfolios for stocks they can sell at a loss, to offset gains on stocks they have sold at a profit. (Even stocks that have fallen may still show gains since the date of purchase, so people who sold during this year's market declines may still face capital-gains tax.)
Tax-loss sales can depress stocks in mid-December, especially small stocks that are thinly traded. But by Christmas, most people have finished their tax-loss selling. Then they start putting the money back into the market.
People also invest late in the year to bet on a New Year infusion of cash into various retirement accounts, which, in normal years, helps push stocks higher. In addition, some professional money managers put cash to work at year's end in an effort to push up portfolios temporarily and improve their performance numbers, a practice known as window dressing.
The WSJ also has a neat chart showing the monthly gains of the dow.
December should show a gain, given if history was to repeat itself. Many of the technicals are also showing signs of strength in the market.
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