Market Sentiment: Volatility as measured by the VIX falls back to 2007 levels

December 2010 seems to be month when all the stars align, and bullishness is reaching historical extremes. Here's what we have reached this December 2010:

1. No New Normal Next Year Seen by Strategists Predicting 11% Gain in S&P 500
2. Hedge Funds Raise Commodity Gain Bets to 4-Year High
3. Put Call Ratio: Everyone’s Betting On The Bull
4. Volatility is back to April 2010 levels
5. Rydex Nasdaq 100 Bull/Bear Ratio At Highest Since Dot Com Collapse
6. US CEOs Most Optimistic since 2006
7. Extreme bullishness in emerging countries, money pouring into stocks at the fastest pace since 2007, biggest rally in 16 years
8. SentimentTrader.com: Equity Hedging Index is at a new record low
9. Trading of U.S. stock options soared to the second-highest level in nearly four decades of history
10. Please also note that the put/call ratio is dangerously approaching the historically low level of April 2010
11. Volatility as measured by the VIX falls back to 2007 levels

Needless to say more.

The VIX index

The VXO index