Investors have shown an unusual antipathy to stocks this year, with sentiment indicators and fund flows showing a level of bearishness that Bank of America Merrill Lynch's equity research team terms "extreme."
Meanwhile, the S&P 500 is at the same level as 18 months ago. Over the past two months in particular, the market has done almost nothing.
Craig Johnson, head of technical analysis at Piper Jaffray, presents a psychological reason for the flatness.
The story, as Johnson tells it, begins at the beginning of 2016, when "people came into the year too long equities."
Amid a substantial drop into mid-February, those investors sold out of their positions — making their second-straight mistake.
The market soon bottomed, and stocks enjoyed a nice rally back from the lows, but investors refused to "get back on board," another miscalculation.
At this point, investors are still underweight stocks (a perception that BofAML data also showed) but don't yet have the nerve to pull the trigger and buy, Johnson said Tuesday on CNBC's "Trading Nation."