With volatility low and complacency high, traders are searching for the spark that could trigger a market pullback.
There are some major earnings Wednesday, including Time Warner, Glaxo Smithkline and Marathon Oil, but no economic reports for the markets to focus on, except for mortgage application data at 7:00 a.m. ET. Oil and gasoline prices could also get attention, when government inventory data is released at 10:30 a.m.
While traders have been chatting about the potential for a pullback from near record highs, the VIX, a measure of market fear, fell 6.5 percent, to 13.72 Tuesday. The VIX reflects market expectations of near-term volatility and is a metric of the out-of-the-money puts and calls on the CBOE.
(Read More: Worst Fear of Traders: It's Not Macro Events)
"There's a lot of people that will equate low volatility with a pullback, but typically volatility goes lower as the market goes higher. It only makes sense," said Patrick Kernan, who trades S&P 500 options with Cardinal Capital.
But Kernan said the talk of a pending pullback is picking up as the market flirts with record highs. "It feels like people are really searching out why or what event will push it down, and they want to be the first ones out," he said. "You hear whispers of it all over the place." In the vacuum of much news, traders are talking about what they think could bother the market, and Europe and the fiscal issues in Washington top the list.
Even with a low VIX, the market has had its most dramatic moves in weeks in the past three sessions. The Dow last made a triple digit move on the first trading day of the year, but it made triple digit moves in the last three sessions. "I think on a dip, you can buy the market overall. We've had a good run here to 14,000 in the last month, so we'll have a pause," said Paul LaRosa, chief market technician at Maxim Group. "Then you could have a constructive correction that could provide a better entry point in general."
LaRosa said the three big market moves since February began show uncertainty and could be precursor to a sell off. "A big swing in the market might mean a correction is in order. But if we get a close over 14,020 that would ease my concern," he said, referring to Friday's high on the Dow.
BMO Private Bank CIO Jack Ablin said he's keeping an eye on the volatility. "It's just remarkable that the volatility continues to fall. Historically it's eery. What it means is in periods where we have this kind of environment in four to five periods, we're okay, and one out of five times you get a big dump to the downside," he said.