With a trade deal nearly sealed, the runway is clear for stocks to head higher into year-end, and the market could continue to lift off into the first quarter before taking a pause, strategists said.

The mid-December announcement by the U.S. and China that they reached a phase one trade deal helped fuel the latest leg of the rally. President Donald Trump Friday said he had a "very good" talk with China President Xi Jinping about it, and the signing is being arranged.

As trade tensions cooled, the global manufacturing economy has also started to show signs of improvement, providing a boost to sentiment. The bond market, which had been sending scary signals, is no longer warning of a recession as yields rise. Against that backdrop, the Fed has stepped to the sidelines but is keeping policy tilted toward easing.

The market also shrugged off the impeachment of President Donald Trump this past week, on the assumption he will be acquitted of charges, and there will be no negative impacts affecting fiscal or monetary policy.

Stocks are now on track to see their best December in nine years, and best fourth quarter since 2013. The S&P 500 pushed through the psychological 3,200 level on Thursday and kept on going. It was up about 2.5% for the month and 28.5% for the year.

"The market is going to go up into the end of the year," said Alicia Levine, chief strategist at BNY Mellon Investment Management. "There's not a lot of pressure for selling because so few people had losses." This year, investors who sell could face large capital gains taxes. That contrasts sharply with this time last year, when the stock market was plummeting and reached a selling crescendo in the half day Christmas Eve session.

"You don't have the pressure to get rid of losing positions this year. Sentiment's gotten pretty bullish in the last few weeks," she said. "Now that the market is bullish, there is a real concern, I think that we are borrowing some of next year's returns."