Even as the Dow hits a new high, and the S&P 500 and the NASDAQ are not far behind, you can hear the same complaint on all the desks: "It's QUIET! Where is everyone?"

Indeed, volume has dropped every single day in November, after spiking up at the end of October. Huh?

It's happened because hedge funds have moved to the sidelines. Many are up 30 percent or more for the year (the S&P is up about 20 percent). At the end of October, many flattened out their positions and took profits—that's why the market dropped on heavy volume at that time.

Hedge funds have made money this year, hedge fund traders have saved their jobs, and many appear content to sit out the rest of the year, providing volatility stays low.

So why does the market keep creeping up?

Chalk if up largely to reluctant sellers: now that hedge funds who wanted to flatten out a bit have taken profits, there does not seem to be a substantial group looking to get out of stocks. Less sellers means even modest buying pressure moves up stocks.

Some have also argued that underachievers are getting sucked in. There seems to be a substantial group that are underperforming and are being forced into the market, and it's not hard to come up with culprits. Many mutual funds and pension funds remained in a defensive crouch for most of the year. Some may only be up 10 percent for the year.

Underperform the market by 10 percentage points, on top of what happened last year? That is risky for one's job future.

The problem with this thesis is that if there was a substantial group panicking, volume would go up as prices were rising. That’s not happening.

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