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Why a Santa Claus rally might not be in the cards

Wall Street may be turning cautious

Many traders expect stocks to rally into the year-end, but the current complacency may be signaling that a late year Santa rally is not in the cards.

If the closes higher Tuesday, it will be the 43rd record high of the year. Stocks traded quietly on low volume Monday, with the Dow up just 13 points at 17,647 and the S&P 500 up 1 point at a record 2,041. The Nasdaq fell 17 points to 4,671, and the Russell 2000 was the worst performer—own 0.8 percent to 1,164.

"We're a little concerned by the fact that investors' memories have become so short that volatility has just completely collapsed to multiyear lows a month away from an incredibly frightening roller-coaster ride. The bearish readings have slipped," said Julian Emanuel, equity strategist at UBS. "A lot of people expect the year to end on a high note."