Is December 15th the day the stock market crashes?

The Ides of December could toll the death knell of the stock market. If Congress fails to extend the Bush era tax cuts all of the gains of the stock market this past year could easily be wiped out according to Daniel Clifton, a Washington partner at Strategas Research Partners.

The crash could come as investors start selling off their stocks to lock in capital gains at the lower 15 percent tax rate instead of the 20 percent it will jump up to January 1st. In addition, December 15th is when many stock options expire. This means that depending on what Congress does, or does not do, investors will have to make decisions to either take their profits at a lower tax rate or risk losing 5% more on those gains in 2011.

Even if Congress passes laws to retroactively make the tax cuts permanent, by Congress waiting until the new class of lawmakers comes to Washington to actively do something, investors will not wait to see if that happens. A bird in the hand is worth two in the bush and it is no different with higher taxes if you can make more money now by bailing on the stock market and then waiting on the sidelines to see what happens.

Read all of Daniel Clifton’s report for a more in-depth look at this potential market crashing Christmas Surprise.