As the prospect of the U.S. economy falling off a "fiscal cliff" looms large, keeping stock markets on edge, one technical analyst says falling off the "cliff" is likely to end up being a non-event for equities.
Despite the $600 billion of tax hikes and spending cuts due to come into force at the end of this month unless U.S. lawmakers reach a deal, the S&P 500 index is not displaying signs of stress, says independent chartist Daryl Guppy.
The stock index is in fact trading upwards as investors increasingly take in the possibility that the U.S. economy might fall over the "fiscal cliff," he told CNBC Asia's "Squawk Box" on Thursday.
"The fiscal cliff is a bungee jump. It used to be exciting. Now it's just a tourist attraction. The market is absorbing that," he said.
While the S&P 500 index has dipped back towards the 1,380 to 1,400 range seen in August and mostly recently in November, stocks appear to be on their way up again, he added. The index closed at about 1,419 on Wednesday.
(Read more: Did the S&P Bottom Thursday? Yes, Says the VIX)
Stock markets have been flip-flopping over the past few months as investors react to headlines on the "fiscal cliff" and remain cautious.
And with the U.S. Congress continuing to be locked in talks about how to avert the "fiscal cliff," some commentators predict that stock markets will be set back by at least a few percentage points if the "cliff" is not averted. (Link: Silver Lining in 'Fiscal Cliff'? Stocks Will Become Cheap)
On Wednesday, Treasury Secretary Timothy Geither told CNBC that the Obama administration was "absolutely" ready to go over the cliff if the Republicans do not agree to raise tax rates on the wealthy.
Fiscal Cliff, No Fears
Jitters about the "fiscal cliff" have pushed U.S. shares down 3.95 percent from a peak hit in mid-September. Still, the S&P 500 has recovered some ground in recent weeks and its overall gains so far this year are 10 percent.
Guppy said another sign that investors are not panicking about the impending U.S. fiscal tightening is the relative stability in the Chicago Board Options Exchanges' Volatility Index, known as the VIX, a widely-watched gauge of market nerves.
The VIX fell 3.86 percent to 16.46 on Wednesday. It is well below readings in the 70s at the peak of the global financial crisis in 2008.
"If we look at the VIX, it's telling us that the market is not anticipating any large moves either up or down. The VIX has gone to sleep prior to Christmas. It doesn't look like it's waking up at this stage," Guppy said.
Scott Nations, Chief Investment Officer and president of NationsShares in Chicago, agreed that that VIX indicated that investors are not too concerned about the U.S. falling off the "fiscal cliff," but added that this did not mean such an event would not be significant for financial markets.
"The VIX is certainly lower than you would think it would be, given the confluence of events right now," said Nations. "But I am not certain the "fiscal cliff" would be a bungee jump because I think that (Republican) Speaker Boehner has some people on his right who are absolutely opposed to any sort of revenue increase that comes from increasing tax rates."
"The potential exists for a serious problem, if we get into the first part of the year and into the middle of January without some sort of resolution," he added.
-By CNBC's Jean Chua.