General Complacency

The market has gone up for so long, and without any scary corrections, that investors are getting greedy.  Their demand for puts is down and the demand for calls is up.  Take a look at the long term chart for the CBOE equity put/call ratio.  It is at extremely low levels. 

The chart resolution is bad, but we're basically at the lows of the year and hovering there for weeks now.  Usually these type of low equity put/call readings are fleeting.  But they have lasted all month.  Ever since tax cuts have been passed, there is a growing optimism about 2018 which looks overblown. 

Many investors will be reluctant to lock in capital gains for 2017 when 2018 rates will be lower, so there is probably a fairly big supply of waiting sell order in early January.  Counteracting that, there will be of course some automatic inflows that often start at the beginning of the year.  But I am leaning towards a pullback in early January, so I think next week will be a good time to start a short position.  Not expecting any big pullbacks, but it should be some range bound trading to start the year, with current levels near the top of the range. 

The uptrend has lasted for quite a long time, so I don't expect it to change to a downtrend right away. It will take a few months of choppy trade before it tops out.  So it should be a good market for counter trend traders in 2018.