Traders are chattering about some troubling signs – most notably a breakdown in small caps – as reasons why the Dow Jones Industrial Average may not make it to 14,000 anytime soon.

The Dow began Wednesday just 46 points from topping the milestone, on a clear course this week to trade above a level it hasn't been near since 2007. But something funny happened along the way.

The valuation figures on Apple look so cheap that it boggles the minds of many traders, but that doesn't mean the stock is necessarily a buy right now, they said.

Apple trades at a forward price-earnings ratio (minus cash) of an astounding seven, according to Goldman Sachs. And revenue will increase a whopping 17 percent this year, estimates the firm. What's more, the stock sports a dividend yield of nearly three percent.

"It is dirt cheap right now," said Michael Murphy of Rosecliff Capital. "But I had to get out because it was trading on headlines and 'The Street' is way too emotional about it."

Using some unusual analysis of global wealth demographics not typically seen in a stock report, Pacific Crest Securities makes a case against owning Apple by theorizing that just about everyone in the world who could pay for an iPhone already owns one.

"Street estimates for iPhone units in 2013 and 2014 would require the iPhone user base to grow to well over 300 million people exiting 2013 and to approximately 375 million exiting 2014," writes Andy Hargreaves, who downgraded the stock to "sector perform." "The 2014 user base would include 43 percent of the total number of people in the world who make over $15,000 per year, which is an unrealistic expectation in our view."

(Read More: Apple's iPhone 5S Launching in June, July: Analyst)

Investors suddenly seem to like stocks again.

After watching the market post double-digit returns last year—and with the Fiscal Cliff resolved for now—Americans are pouring billions of dollars into stocks.

Just over $22 billion flowed into long-term equity mutual funds and exchange-traded funds in the week ended Jan. 9, according to Bank of America Merrill Lynch. That was the second-highest amount on record after the $22.8 billion that went into all equity funds in September 2007.

"I have to take this as bullish," said Dennis Gartman, veteran author of the daily Gartman Letter. "Perhaps one gets a bit antsy when the public's in, but inflows are always better than net outflows and the public is still sitting on a mountain of cash or debt securities."

Some, however, believe it's too early to tell if this is really a trend.

"I'm a little skeptical," Art Cashin of UBS told CNBC on Friday. "I want to see if they continue." (Watch video above)

On Wall Street, the retail investor is often seen as the dumb money. As the thinking goes, by the time Main Street has caught onto a bullish or bearish trend, it's time for the so-called smart money – the professionals – to do the opposite.

Those days may be over, thanks to an index by TD Ameritrade being unveiled Tuesday.

Dan Loeb's Third Point was the clear hedge fund standout in a horrible year for the industry as almost nine out of 10 managers underperformed the S&P 500. Omega Advisors' Leon Cooperman also scored big.

Loeb — once better known for his acerbic letters to CEOs — used an activist position in Yahoo and the contrarian buying of Greek bonds to drive the firm's flagship fund to a 21 percent gain in 2012. The firm's more-leveraged Ultra fund posted an even bigger 34 percent return.

"Among his many talents, the one that I appreciate in Dan is his adaptability and ability to learn and evolve," said SkyBridge Capital's Anthony Scaramucci, who holds one of the largest gathering of hedge fund investors every year in Las Vegas. (Loeb is a speaker.) "This is the main reason in my mind why he has become one of the world's greatest investors."

Goldman Sachs strategists have issued a big warning to clients hiding out in bond funds: You're about to lose your shirt.

The reason: interest rates began rising this week, and if they return to the historical average yield of 3 percent, prices for long-term bonds will plummet. (By their very nature, fixed income prices must fall if rates rise.)

"A reversion of risk premiums to historical averages of 6% nominal rates (3% real rates and 3% inflation) would suggest estimated losses in portfolios with bond durations of 5 years of 25% or more," equity strategist Robert D. Boroujerdi said in a note.

The yield on the 10-year Treasury hit almost 2 percent this week–an 8-month high–after minutes from the Federal Reserve's last meeting showed several members believe the central bank's quantitative easing should end this year. (Read More: End of Stimulus? What's Behind the Fed's Surprise Statement)

From its humble beginnings in a speech by Ben Bernanke to its surge to the top of the American lexicon, the "fiscal cliff" was banished to the annals of history Wednesday to the delight of many of the populace bedeviled by the term.

But it wasn't just passage by Congress of a budget act Tuesday that put an end to our national nightmare, it was also the term taking the No. 1 slot in Lake Superior State University's annual list of banished words.

"Fiscal cliff" garnered the most nominations for this year's "List of Words to be Banished from the Queen's English for Misuse," which has been put out every New Year's Eve since 1975 by Michigan's smallest public university. Second on the list was the phrase "kick the can down the road."

Many investors were selling into the monster stock rally Wednesday on the notion that the "fiscal cliff" deal hastily hatched New Year's Day did not solve any long-term issues and set the country on the path of several more brinkmanship moments in Congress.

While the risks can be large, sometimes the biggest paydays on Wall Street come from making a contrarian bet on the most hated sector on the planet. This was never truer than during 2012.

The housing sector, which brought the financial system to its knees in 2008 and continued to be an albatross around the middle class for the next three years, was the hottest trade this year as consumer confidence improved and as the Federal Reserve kept interest rates low. The central bank even went so far as to purchase mortgage-backed securities.

The iShares U.S. Home Construction ETF (ITB) surged more than 75 percent in 2012 as shares of homebuilders such as Pulte Homes and Lennar doubled or nearly doubled and construction-related stocks like Home Depot jumped. More complicated mortgage-backed securities were among the biggest winners for hedge funds brave enough to buy them.

"They took the painful writedowns and survived the hit," said Barry Ritholtz, CEO of Fusion IQ and author of The Big Picture blog. "And have you priced a mortgage lately? It's 3.25 percent for a 30-year fixed."

True to its function as a discounting mechanism, these stocks starting moving higher early on in the year in anticipation of a relatively sizeable increase in home prices.

It got there when prices climbed at a 4.3 percent annual rate in October, according to the latest seasonally-adjusted S&P/Case-Shiller 20-City Composite Index. That was higher than many economists predicted, but no surprise for buyers of these stocks.

"Since the businesses that were able to survive the home construction nuclear winter became so lean, they were highly leveraged to a pickup in business," said Mitchell Goldberg, president of ClientFirst Strategy. "The homebuilding sector was one of those stories that you knew it would turn around eventually, but it took a heck of a long time."

To be sure, the Home Construction ETF is down more than 60 percent from its high back in 2006. And during those days, home prices were posting double-digit annual gains on a monthly basis, according to S&P/Case-Shiller.

(Read More: Robert Shiller: Don't Await Housing Boom)

Many investors think the easy money has been made in this trade and there will be tough sledding ahead again for the sector as unemployment stays elevated and foreclosures pressure prices.

"A lot of people seem to think that if the market turns around, that means more of the same," said Professor Robert Shiller, Yale economist and co-creator of those very indexes, in an interview with CNBC this month. "We might see home prices go up a little bit above inflation, but it is not likely that we'll see a real boom."

So what's the most hated sector going into 2013? Going by ETF performance, it's natural gas with the U.S. Natural Gas Fund(UNG) down 27 percent in 2012. Feeling lucky?

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