Outlook: What Investors Need to Know in December

The American markets are up a bit more than 3.5% since the Paris attacks. They've proven resilient in the face of the geopolitical turmoil and uncertainty that trouble the world today.

The Fed's rate hike is looming out there, and odds are that Yellen & Co. will act to raise rates at the next meeting - or the one after that.

The increasing certainty of a hike isn't going to be a spoiler this month, though; the markets love it when you take uncertainty out of the picture, and an inevitable rate hike has been periodically priced in for more than a year now.

We will see some excitement, though, and some profits, if we trade smartly. So here's what you've really got to watch out for now and through the end of 2015...

Where the Stock Market Goes from Here

I'm convinced the Dow will hit 18,000 any day now, almost certainly before Dec. 31. The markets have been going sideways for a week or so, but the adoption of the yuan as an IMF reserve currency, along with stronger than expected unemployment numbers out of Europe, have prepared the markets to swing for new highs.

But... those highs probably won't last. Now, precisely why they won't stick around is a story for a different day, but it's enough to say that the underlying economic strengths needed for a sustainable rally and bull market just aren't there, and I think we'll see a pullback not long after hitting those highs.

The smart move right now is to tighten up your stops and get ready to take profits when the market does kick over. Consider using some of these investing techniques, too.

That's the bad news.

The good news is that the bad news doesn't really matter. I like to trade stocks, not entire markets, and I'd love to buy these stocks on even the slightest weakness...

What's Driving This Month's Action

Last week, we talked about the creeping weakness in traditional brick-and-mortar retailers, like department stores and clothiers. But it would be a mistake to write off the entire retail sector. There's plenty of money to be made here once you understand how and where it will be made and the forces in play.

This month, it's all about the American consumer.

Importantly, we've seen some of the highest wage growth in a long time in the November reports. Hourly pay grew by 2.6% in the year to October. Paychecks could still be bigger, even a lot bigger - there's a long way to go before wage growth hits that 3.8% we saw in the pre-Crisis year of 2007 - but the American consumer should prove strong into the end of this year and beyond.

To be sure, Americans are still saving at a high rate of more than 5%, but their spending has been strong enough to offset even the Chinese economic slowdown. And it's where they're spending their money that's important to us right now...

My Favorite Stocks to Buy (and How to Buy Them)

This holiday season, people are forking over huge chunks of expendable income to tech-centric retailers. Amazon.com Inc. (Nasdaq: AMZN) will continue to dominate and strengthen as our society moves more and more of its activities (especially shopping) online and these companies expand their offerings and services. I think the shares are a good buy now, but they're a great buy if we see them pull back by as little as 2% to 4%. This is one to hang on to for the foreseeable future.

Costco Wholesale Corp. (Nasdaq: COST) is a "warehouse" retailer with strong fundamentals that offers bulk pricing that budget-conscious consumers find irresistible these days - despite that 2.6% wage growth. Here's the thing... The company is currently dealing with an E. coli-related recall prompted by contaminated chicken salad and celery. That in turn has put some significant downward pressure on the shares, which is giving us a beautiful entry point right now. Consider buying even more if the price gets lower to make the most out of a snapback.

Rounding out December's likely outperformers are Home Depot Inc. (NYSE: HD) and Lowe's Companies Inc. (NYSE: LOW) - two home improvement giants that are poised to move higher this month. Home Depot has just reached a contingent settlement with MasterCard Inc. (NYSE: MA) over a gigantic data breach in 2014 that cost the retailer $152 million after insurance payments. Regardless of that, the country is currently in the midst of a $1.1 trillion construction spending boom that should send shares of both companies higher in the near term.

Not all of them are long-term holds, but these four companies should be standouts throughout the rest of the year.

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D.R's Market "Nanoscope" Reveals Dozens of Chances to Gain: This new tool helps him uncover new profit opportunities - like supplemental "income checks" - every 24 days on average. So far in 2015's up-and-down market, this could have padded your nest egg with an extra $60,429 or more. Find out how you could secure the retirement of your dreams... with less unnecessary risk than you ever imagined. It's all right here...    

About the Author

D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.

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