The December rally may be reaching its climax, with just two weeks to go before Santa Claus makes his midnight run. Dwindling volume, excess optimism, and history all point to a stock market that could be running out of steam.

Investors appear to have grown complacent as the CBOE Volatility Index, or VIX has fallen to levels not seen since April.

Stocks have made new highs on almost a daily basis.

The S&P 500 closed on Friday at its highest level since September 2008 and the Nasdaq scored its best finish since late December 2007, with many expecting gains to run through the end of the year.

But Cleveland Rueckert, an analyst at Birinyi Associates in Stamford, Connecticut, believes the year-end rally may be largely done.

“The majority of that gain may already have occurred,” he said. “Most people are more likely to be closing out their books at the end of the month and looking for opportunities to open new positions at the start of the next month.”

Rueckert said that over the last 65 years, when the S&P 500 has rallied at year’s end, the average gain has been 3.4 per cent between Thanksgiving and New Year’s. So far, the index has risen 3.5 per cent since the start of the period.

Today starts the last five-day trading week before Christmas. The following week will be cut short by the holiday. With 25 December falling on Saturday this year, the US stock market will be closed on Friday 24 December to observe the Christmas holiday on Saturday.

Inflation data for November will dominate the week’s economic calendar, with the US Producer Price Index due tomorrow and the US Consumer Price Index set for Wednesday.