In the Emerald City, a.k.a. Wall Street, central banks are the all-powerful Wizard of Oz. Dorothy and her friends are hopelessly bullish.

Unlike the magical Land of Oz, however, there is no yellow brick road for stock investors nowadays.

Instead, there have been 37 consecutive trading days without a 30-point pullback on the S&P 500 SPX, -1.56% . The last time that happened, the S&P suffered a 200-point slide.

A magician explains the money illusion'

There have been 48 new highs on the S&P 500 in 2014. The last time the S&P 500 had so many closing highs was in 1929.

Does history repeat itself? On Dec. 5, the S&P 500 reached a record closing high of 2075.37, and its highest intraday level of 2079.47. To put that into perspective, on March 24th, 2000, the S&P reached a closing high of 1552.87 during the dot-com bubble before crashing by 50%. On October 9, 2007, the S&P had a record close of 1565.15, and then tanked a month later.

Does P/E matter? The current P/E of the S&P 500 is 19.54. The Shiller-P/E is 26.8. Typically, the average P/E of the S&P 500 is 14.

Some stock-market veterans complain that the market is so skewed, traditional indicators are useless. For example, the RSI of the Dow Jones Industrial Average DJIA, -2.23% is at 75.96, well above the typical overbought level of 70. And the RSI of the S&P 500 inched up to 67.89. The market can remain overbought for long periods, but not forever. This market must come back to earth eventually.

Sentiment indicators also are sky-high. The VIX VIX, +9.13% fell to 11.82 on Dec. 5, which reflects extreme complacency and bullishness. The percentage of bears in the Investors Intelligence survey is at historic lows (13.9% as of Dec. 5). The lowest on record was 13.3%). Almost every major stock analyst is bullish about 2015. With nearly everyone on the bull’s side, what could possibly go wrong, right?

Where are the buyers? The NYSE New Highs/New Lows looks terrible (198/145 last Friday). Market volume has also been tepid.

Finally, the NYSE Tick and stock prices are diverging, another signal market internals are eroding.

Yet even with all of these warning signs, the market trend is up, according to its moving averages. Nevertheless, a market going parabolically higher while market breadth is low is a huge red flag.

To be sure, there are real reasons for investors to be optimistic. The U.S. added 321,000 new jobs in November, the biggest gain in three years. And the unemployment rate is at 5.8%, a six-year low. Also, falling energy prices are good for consumers. If you’re an economist, all of this is good news.

But Wall Street and Main Street often speak different languages. In the wacky world of Wall Street, the stock market may go down on good economic news (and vice versa).

One clue that the bull market is over is when volatility climbs. We’re talking about extreme rallies and reversals, a gap up or down in the morning, followed by a reversal at the end of the day. We’re already seeing that in the global markets (China stocks rose 4% in single day last week).

Once volatility returns to the market, traders will get back to work. Although many investors think that a churning, sideways market is healthy, it is actually dangerous.

Some air has to be let out of this bubble, or instead of a healthy pullback, you’ll witness something more horrendous. Yes, the market can still go higher, but the air up here is thin.

There is also an old trader’s rule that the “last eighth of a point is the most expensive.” Although we don’t trade in fractions anymore, the rule is solid: Trying to capture those last few points at the market’s high can cost you dearly.

After reading all of these clues, you might be tempted to short the market. Careful — you could be early. Unless there is an imminent market correction, a better plan is to wait for late-day selloffs, intraday reversals, and failed rallies. These are the clues you need before aggressively pulling the short-selling trigger.

Still, in the magical world of Wall Street, anything is possible. Just close your eyes, tap your heels together, and wish for Dow 20,000. But if I’m right, like any fairy tale, this market simply will be too good to be true.