Since September's surge of exuberance, stocks have been sliding lower on a combination of fears over the fiscal cliff, eurozone tremors, and a dramatic pullback in the investment component of GDP growth. But here's the thing: We could be on the cusp of at least a short-term turnaround.

Republicans and Democrats seem to be inching towards a compromise that would push tough choices on tax hikes, spending cuts, and entitlement reforms into 2013. And there are signs that, after cutting new orders and drawing down inventories, businesses are being forced to increase spending again.

If so, a rebound in business activity could push stocks out of their funk for the next few months as we enter what's historically a strong seasonal period for the market. Here's why it's time to shed the fear, and embrace a little holiday cheer.

JPMorgan economist Bruce Kasman notes that early reports on October's economic activity bolsters his confidence that growth is poised to lift through the end of the year. For one, JPMorgan's global PMI manufacturing survey has turned around as the new orders index rose and the finished goods inventories index fell for the second consecutive month. That's been a reliable signal of a positive shift in growth in the past.

Growth is being led by the United States, as well as Mexico, Canada, Brazil, Denmark, India, Indonesia, Ireland, Russia, the Netherlands, and Turkey.

The early signs of hope were confirmed Friday by the Markit Flash U.S. PMI manufacturing survey for November, which strengthened to a five-month high signaling a "moderate improvement" in manufacturing conditions. Both production output and new order growth accelerated to a five-month high while employment grew at its best clip since July.

As the chart above shows, the rebound should start being confirmed in the Fed's measure of manufacturing output soon.

Hurricane Sandy might be clouding the data somewhat, but nonetheless the team at Capital Economics believes the data implied manufacturing output will start expanding at a three-month-over-thr​ee-month annualized rate of around 3%; rather than contracting at a 3% as it did in October.

Combined with my expectation of additional Federal Reserve policy easing at its December meeting, overly pessimistic investors, and the growing likelihood that Greece will receive not only its next bailout aid disbursement -- but a debt reduction and bailout program extension as well -- I think this manufacturing rebound will force traders to cover their shorts and provide the kind of buying power to the market that hasn't been seen for months.

For now, I continue to recommend a focus on crude oil, silver, and individual energy names including Tesoro (TSO) and Valero (VLO). Both positions are up more than 7% since I added them to the Edge Letter Sample Portfolio earlier this week.

Disclosure: Anthony has recommended TSO and VLO to his clients.

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