Stock market makes quiet climb

— -- What's missing in the stock market this year? Drama.

The wild one-day moves that once made investors sick have vanished as stocks have set new bull-market highs. The steady rally has made some investors nervous that markets are too quiet — and others happy that they can enjoy the tranquility.

Optimists say such quiet trading is to be expected at the start of a longer-term rally, because that's when everyone thinks stocks are overpriced. "People are afraid to get in as the market moves higher on tepid volume," says Joe Kinahan of TD Ameritrade. "But then volume increases, and that's what can lead to big rallies."

The 2012 rally is plenty respectable. The Dow Jones industrial average is at a nearly four-year high and about 50 points away from 13,000.

Signs of calm in the markets are apparent from:

•Modest movements. One hallmark of the financial crisis was that incredibly sharp moves became commonplace, with the Dow swinging 200 points or more between its high and low — and sometimes much more. There were 81 days when the Dow swung more than 200 points in 2011 and it happened 173 times in 2008, says Fane Lozman of Scanshift.com. This year, the Dow has had just one day with a 200-point swing during the day, and it has never closed with a 100-point loss.

•Quiet trading. Volume continues to be light. The number of shares traded on the NYSE, Amex and Nasdaq each day in February on average has been 7.1 billion, says BATS Global Markets, which is down 5% from this point in 2011 and 21% from this point in 2010.

•Subdued nervousness. The CBOE market volatility index, a measure of investors' fear, is down 24% this year and 61% from last October. "There's an exhaustion of panic," says Randy Frederick of Charles Schwab. The calm is partially due to investors waiting for a pullback before jumping in, Kinahan says. Meanwhile, positive economic indicators are giving investors more confidence.

But there are also bigger forces at work, says Joe Saluzzi of Themis Trading. Moves by the Federal Reserve and the European Central Bank to pump money into the market encourages bullishness, he says. It's a no-lose proposition, because even if the U.S. or European economies sputter, traders think central banks will pump in more cash to help short-term. Saluzzi warns that if interest rates start to rise a lot, sentiment will turn quickly.

But until then, investors are taking in the tranquility. "Volatility is created by uncertainty, but the fear factor is out of the market," Lozman says.