Veteran investors signal quiet stock market warning

Market Overview - The Standard & Poor's 500 has been fluctuating between record highs and support levels, currently pushing against resistance near the 7,000 level, with investors treating downturns as buying opportunities [1] - Investor psychology is expected to play a significant role in future market movements, with a focus on when investor appetite for buying during downturns may change [2] Investor Sentiment - Small investors have shown determination in viewing every market dip as a buying opportunity, which has been a successful strategy in the past [3] - However, there are warnings that this strategy may not always be effective, as indicated by market experts [4][7] Market Risks - Despite the impressive stock market rally, there are underlying risks, including potentially overblown investor expectations due to benign market forecasts and three years of double-digit gains [8] - Concerns are raised about "absurd" valuations and overly optimistic sentiment gauges, which could lead to market headwinds if investors lose confidence in buying the dips [9] Financial Indicators - Average money market account balances are at 20-year lows, while margin-account balances are at their highest ever, indicating aggressive investor behavior that may be unsustainable [9]