The term "capitulation" refers to the point when sentiment has gone so far in one direction that a turnaround, be it higher or lower, is a certainty. (Read More: S&P 1,500: The Last Barrier Before a New Record?)
One of the most respected maxims on trading floors is that bull markets end on good news and bear markets on bad news. In simpler terms, that somewhat counterintuitive observation means a run higher stops when the market no longer reacts positively to good news, while a run lower halts when the market no longer falls on bad news.
Lately, the news has been mostly good, if only marginally so.
The worst of the fiscal battles in Washington have abated for the moment, and companies have managed to beat sharply lowered earnings expectations. The European debt crisis is on the back burner, and geopolitical tensions, particularly in the Middle East, have quieted.
Still, any one of those substantial market headwinds could start blowing again on a moment's notice, worrying some that the current rally is heading for trouble. (Read More: Why Tech Earnings Could Decide Market's Direction)
"We are reaching capitulation levels," said Walter Zimmerman, senior technical analyst at United-ICAP. "What troubles me is there's never been a happy ending from that combination of extreme complacency."
Indeed, many of the metrics that gauge market sentiment are in startling territory.
The CBOE Volatility Index, an options measure of market fear, is around the 12.5 range. The VIX, as it is called, has only traded below 14 about 21 percent of the time in its 21-year history and has closed below 10 just nine times in nearly 6,000 trading days, according to Nicholas Colas, chief market strategist at ConvergEx.
"The bottom line here is that at current levels you must – repeat MUST – believe that macro concerns (Euro, debt ceiling, China, whatever used to keep you up at night) are no longer an existential threat to either the global economy or to corporate earnings," Colas wrote in a recent volatility analysis. "And if you cannot get your head around that benign scenario, you must – repeat MUST – treat current equity prices with real caution."