I could be wrong obviously but here's one exact way in which I could be wrong.
Due to mutual fund excise tax rules, October can be a nasty month for taking gains or losses - selling stocks - whether the market is having a good or bad year.
There could be a lot of funds out there who:
- Are close enough to mediocrity that their year is salvageable
- Who know that they can handle the redemptions they have gotten or are going to get
- Whose long term record is so good that investors have told them they aren't pulling out
What these funds have in common is that the best possible scenario for them is a higher, or much higher close for stocks at year end. I don't think many are still pressing the short side given all that has happened. There has to be a lot of cash on the sidelines. It's not untinkable that a few dozen thought leaders in Midtown might lock arms and march some favorite names higher between now and Christmas.
A huge rally could happen but it's not what I'm betting on.