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On Christmas Eve it felt like stock markets were losing all support as the massive sell-off had made it the worst December since 1937, during the Great Depression! But, as typically happens when there seems no hope and no good reason to own stocks, the market rallied. The recovery at that time was effectively a combination of many factors including a totally oversold technical condition, the end of the tax-loss selling season, massive year-end pension re-balancing in the largest U.S. funds and some very ‘dovish’ commentary from the Federal Reserve about a more nuanced approach to interest rate increases in 2019. Stocks rallied slightly into year-end and then charged into January with a rally very reminiscent of the January rally 12 months ago. The most beaten-up industrial and financial stocks led the advance, helped later in the month by earnings which were not quite as bad as feared. (more…)