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There are times in a market cycle when there are not many reasons to buy, and even less reasons to sell. We get the feeling that we are stuck, yet are we?

I have always looked at these periods as periods of consolidation. When the weaker performing stocks begin to move up in price and the better performing stocks begin to pull back.

We are not talking about major moves here, especially if the trading volume is relatively normal. I have usually seen 1-5% moves in any particular stock at this time of year and during these periods of consolidation and re-balancing.

What's Going On?

Well, there is a confluence of buying and selling by the largest stockholders. Mutual Funds, Hedge Funds, Institutions, Corporate Pension Funds, Teachers Pension Funds and the major re-balancing of the largest individual investors.

All of this movement results in an almost sideways move to the markets with a bias to the upside. In my opinion and experience, the upside bias is mainly due to the buying of better performing stocks by mutual funds that do some holiday window dressing. The mainstream news media call this period the “Christmas Rally." I see it as a time to buy some stocks that tend to move higher based on their past performance, not necessarily their future outlooks.

My Year End Shopping List

OK, so now we take a look at our portfolio, as we have selected to track, and look at some of the stocks to buy now. Obviously my crystal ball is just as good as anyone else’s, but hey it’s holiday shopping season right? So let’s buy some stock.

Annaly Capital Management (NYSE:NLY): Price-$16.29/share, 15.00% dividend yield, ESS rating of neutral.

NLY has underperformed in 2011. It began the year at $17.80/share and hit its low of $15.48/share on October 3. Today the price was $16.29/share and has been moving up over the last several weeks overall.

Every year during the fourth quarter, the price showed an upward bias. Even when the stock slipped it began to move late in the year (2010). Also, holders of NLY love to trade around the ex dividend date. It has not been announced yet, but it will probably be the week of 12/26 this year. It always seems to move higher prior to ex dividend dates as well (with a few exceptions such as the most recent one).

Combine the Christmas rally effect, and the ex dividend run up with the basic fundamentals of NLY and we have a pretty good stock to buy now.

Remember, the yield curve has not flattened ( it actually has widened a bit), the Operation Twist issue has not done anything to earnings that we can actually see, and the SEC question has faded into lala land for now. I am a buyer here, and I want that dividend on the added shares.

AT&T (NYSE:T): Price- $29.17/share, 6.00% dividend yield, ESS rating of bullish.

Well, T has had its share of bumps and bruises this year, most notably the T-Mobile debacle that has thrown a huge monkey wrench into what I consider to be my stock pick of 2012 (Review my article here).

The odd thing about the mess is that the bottom has not fallen out from under AT&T, and it has shown resilience in the face of this turbulence. In my view, this is a very nice signal for me to buy now.

The same trend during the last quarter of each year occurs, even in down years. Guess what, we also have an ex dividend date coming up around the first week of January, so that also seems to have come into play of late.

Combine that with a great balance sheet (yes I know about the $3 billion charge, thank you, but it has not been forked over ... yet) and a terrific pipeline of products I previously mentioned in my article on T, and I think I see green snowflakes in AT&Ts near future. I am a buyer now. I also want that pretty neat dividend on some extra shares.

Johnson & Johnson (NYSE:JNJ): Price- $63.49/share, 3.75% dividend yield, ESS rating of bullish.

JNJ has had a relatively flat year in terms of its PPS but it has had the full range of up, down and sideways movements depending on eurozone news. JNJ has a fairly large international business over there, so I suppose that fluctuation can be expected with the mess over there every day.

The way I see that soap opera is that at the end of the day they will come up with their own form of a bail out. I can’t wait for this soap opera to be canceled. It has had a long run, and we are sick of the news from over there every five minutes.

Once the dust settles, I believe JNJ will head back up.

The last quarter trend of pops happens with JNJ as well, even in the down years.

The dividend effect is less apparent than in my other two picks, since it probably will go ex dividend the last week of February 2012. Still, we might see a dividend increase, and why not own more of the stock at attractive prices?

I am a buyer at these levels, and I am waiting for the eurozone issue to be settled soon as I hope to watch the JNJ share price rise and dividends increased.

My Opinion

It might be a short list for Santa right now, but who knows. I might add a few more stocks in the next few days. After all, there are 18 more days 'til Christmas.

NLY, T and JNJ seem to be worth my buying at current prices. Perhaps they are on your shopping list as well.

Please do your own research and do not rely on the opinions given in this article. Consult a professional stock advisor if need be, as well as making your own choices for your own investment needs.

Source: 'Tis The Season To Buy Stocks: Annaly, AT&T And Johnson & Johnson