This ‘really scares me’ about the market: Top trader

What market sentiment tells us
What market sentiment tells us   

Even though he tends to be bullish, David Seaburg is starting to get nervous about stocks.

Seaburg, the head of equity sales trading at Cowen, is noticing "a lot of complacency in this tape."

It's not that investors are screamingly bullish, in a way that would be reminiscent of stock market bubbles. To the contrary, Seaburg observes that it looks like a "tired market."

"I really believe that there's not an expectation we go a lot higher in the near term, but there's not a real concern that we're going to fall out of bed, which really scares me," he said Tuesday in a "Trading Nation" segment.

Investors aren't buying protection, either, as evidenced by the 31 percent drop in the CBOE Volatility Index this year. And since investors aren't preparing for much downside, Seaburg frets that a small dip could lead to a major down draft.

Read MoreThe VIX is getting crushed in a 'volatility trap'

"If there is something that sparks a selloff, it could be a lot more exaggerated that people expect," he said.

On the other hand, technician Rich Ross of Evercore ISI is bullish. He says since market sentiment is not "euphoric," it shouldn't be a source of concern.

Further, Ross notes that while the S&P 500 closed Tuesday just 20 points from its all-time closing high, only 54 percent of stocks are above their 50-day moving average. That tells the technician that "there's still a lot of stocks that can join the party."

"We're actually quite constructive on the market," Ross concludes. "The levels of breadth suggest further upside from here."


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