The market's stubborn refusal to react to bad news is fueling more concern that the surge in stocks is running out of steam and a top is near.
High levels of investor exuberance are a hallmark of turnarounds. In this case, the enthusiasm is coupled with record levels of complacency and a general feeling that nothing can stop a bull market that began all the way back in March 2009 and has withstood any number of challenges to keep on climbing.
The latest sign comes from the almost unmitigated flow of investor cash into funds that focus on stocks. For years, investors had been pulling money from equity funds, but as of late have been piling back in.
Most recently, equity funds took in $9.9 billion over the past week, the seventh straight week of inflows and a number that brought the year's total to $194.9 billion, according to Bank of America Merrill Lynch.
The pattern is now "becoming more consistent with [an] autumn top in risk assets," said Michael Hartnett, chief investment strategist at BofAML. He said a declining dollar and U.S. growth coupled with a tighter spread between government bond yields and the end of high-yield bonds as a market leader would constitute an "early warning system" for a peak in stocks and something investors should watch.
Hartnett is not alone in his warning of potential troubles for stocks. Bond king Jeff Gundlach is making options bets against the market and the current low-volatility climate.
Wall Street has abounded with calls for a market pullback, which hasn't happened in any meaningful terms in 2017. The year has seen the S&P 500 gain just more than 10 percent, itself defying most predictions that stocks were in for a more modest upside.
That growth may be starting to work against itself.
Bullishness among market professionals, as measured by the weekly Investors Intelligence survey, has eclipsed 60 percent, the highest since February and what historically has been a "major warning" for a pullback.