I'm going to try to couch my take in the form of a 'set up,' because it's certainly not a forecast.
(a) The usual EOQ window dressing takes on added importance in Q4. Investors (aka clients and potential clients) + managers (aka bosses) pay more attention to calendar year performance numbers- just the way people are programmed to think.
(b) Starting Monday, JQPublic will put 2010 behind him, and start to look ahead to 2011. He may start crunching numbers, considering for instance the difference between 6.2% and 4.2% of each paycheck- and decide (i) he can start contributing more to his retirement account each month and/or (ii) he can actually afford a few of the things he cut from the budget last year (dinner out once a month, piano lessons for the kids, whatever).
(c) As of last Friday, investors have much to be thankful for- it's been a decent year for longs. Which only begets more optimism re next year. Naturally, investors (of whom 90% consider themselves more savvy than others) will want to position themselves ahead of the crowd- thereby driving indexes higher into year end. There will be a pullback at some point, of course. I just don't think it's going to be this week.
(d) Too many headlines trying to talk the market down. MarketWatch, for instance, had one running most of the weekend that (IMO) tried to set readers up for lower(ed) expectations.
(e) Bear trap. There should be signs posted on the opening pages of broker websites for the last few trading days of each year- 'Short at your own risk.' I really believe that. Especially this year. The trend is still up. Colin Twiggs reports 'A steep rise on Twiggs Money Flow (13-week) indicates strong buying pressure.' As I write, the Shanghai Composite is up +0.6% despite a surprise rate hike. There are 51 other weeks in the year- do you really have to short the last week in December? Not me, man.