Despite cries of “overbought,” “correction due,” and of course, the ultimate acid producer, “markets are in a bubble,” for seven weeks stocks have risen on slightly increased volume and gradually increasing breadth.
As more stocks appreciate, the public’s disbelief grows. The sentiment numbers from the Association of Individual Investors (AAII) show a steady drop in bullishness. The number of investors surveyed that expect stock prices will rise over the next six months fell from 49.2% on Oct. 24 to 34.4% on Nov. 21. As might be expected, during the same time frame, bearish sentiment increased from 17.6% to 29.5%. Since the public is usually wrong, these reports are bullish for stocks.
My analysis indicates that there are more new highs to be made in December, since institutional investors usually load up on large-cap stocks before year-end. And this year, with blue chips lagging, a pattern of large-cap catch-up is even more likely. Thus, this month’s buy list is predominantly populated with stocks in this category.
Here are your top stocks to buy for December: