Despite an overwhelming lack of clarity from the politicians, the stock market has reacted well in the face of uncertainty, and that alone is bullish. And so, if the fiscal cliff problems can be solved before Christmas, then the market could have a solid Santa Claus rally.
But since the outcome is far from being decided, many holders of non-performing stocks and those that are overbought should sell and wait out the results of the political wrangling. Each day of dispute tightens the coiled spring of market volatility, and when it releases we expect a dramatic price move — the problem is it’s impossible to predict the direction of that move.
Attention short sellers: Many companies are paying extra and/or extraordinary dividends before a tax hike takes effect in 2013. If you are short stock on the ex-dividend date, you are on the hook for that dividend since you have borrowed the stock from a lender who deserves the dividend.
Here is our list of stocks to sell in December: