Even with stocks surging to record highs, traders see upside for the market into year end and they are looking to Santa to provide some of the lift.
Stocks rallied sharply and the Dow and S&P 500 set new highs, after the Fed on Wednesday announced a surprise decision to taper back its $85 billion bond-buying program by $10 billion. The Fed is expected to gradually wind down the program over the next year but it is still holding $4 trillion of securities on its balance sheet.
"This is clearly an event driven rally. Finishing at year highs is not at all out of the question," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab. The seasonal factors, already driving stocks this month, are seen taking over in what traders call a Santa rally. According to the "Stock Trader's Almanac," the final days of December and first several days of January are when the Santa rally occurs.