With the S&P 500 index hovering less than 2 percent below its record high, investors' confidence is riding high, and that could signal trouble for the market, says Boris Schlossberg, a trader and strategist at BK Asset Management.

The American Association of Individual Investors sentiment survey for the week ended June 24 shows that only 21.7 percent of investors thought stocks would fall for the next six months, the lowest level since February and down 12.6 percentage points from a week earlier.

Meanwhile, 35.6 percent of investors were bullish, up 10.1 percentage points from a week earlier.

So what's the problem?

"You know the old saying, 'A bull market climbs a wall of worry'? We're not seeing any worry at all in almost any of the indices, and that is itself the most worrying thing there is right now," Schlossberg told CNBC.

Investor optimism itself won't push stocks down, he said. "But if we have any sort of negative news catalyst, that could be the reason why we have a pretty severe correction."

Star mutual fund manager John Hussman, president of Hussman Investment Trust, certainly is looking for a severe correction.

"The financial markets are establishing an extreme that we expect investors will remember for the remainder of history, joining other memorable peers that include 1906, 1929, 1937, 1966, 1972, 2000 and 2007," he writes in his weekly commentary.

"The failure to recognize this moment as historic is largely because investors have been urged to believe things that aren’t true, have never been true, and can be demonstrated to be untrue across a century of history."

So what are the un-truths? The principal one is that the Federal Reserve is boosting financial asset prices, Hussman says.

"In fact the primary driver of financial markets in recent years has been pure speculative risk-seeking. While risk-seeking is encouraged by monetary easing, it is not a reliable outcome."

The Fed has kept its federal funds rate target at a record low for 6 ½ years, and its balance sheet has ballooned to $4.5 trillion.

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