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Seller’s Remorse Will Drive Stocks Higher Through Year End: Kilburg

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Bears leaning against stocks into the end of the year will rue the day according to Jeff Kilburg, founder & CEO of Killir Kapital Management. In the attached clip the CNBC Contributor and former member of the Notre Dame football team says sellers were caught offsides by last week's rally, leaving them scrambling to get long exposure.

But there are reasons to be cautious. Beyond the familiar question marks in Europe and China, dismal corporate earnings and tax changes likely to be implemented early next year as part of the Fiscal Cliff have investors trimming stocks. It may not make sense to sell stocks to avoid a higher capital gains tax rate, but high yield stocks will lose fundamental value should dividend taxes be increased.

Uncertainty can make traders of us all. Kilburg thinks the people selling ahead of last week's ramp are going to be driven back into markets as a function of remorse as much as anything else. Should a rally materialize those short stocks here will be forced to buy in not through regret, but to stop the bleeding in their trading book. Either way, there figures to be people buying stocks at higher prices.

Envisioning volatile price action as a function of the ebb and flow of fiscal cliff news Kilburg thinks we end the year higher almost no matter what DC does. His target for the record is 1,425 by the end of the year but the luck of the Irish could take us all the way back to mid-October highs over 1,460 on the S&P 500.

"We could test those (levels) in the next 34 days," he says with a gleam in his eye. "It's not out of the realm of possibility."

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