Confidence Boost Eludes Chip Traders

"Whatever the market is expecting is already priced in," he said, adding that there's a much better chance that companies will exceed current targets than that they'll disappoint. This will be the catalyst that drives stocks higher, Fraley noted.

Still, other investors are trying to make the muted environment pay off. Kim Arthur, managing director of San Francisco's Main Management, has set his portfolio for a year of single-digit returns, using the sale of covered call options, known as a "buy write" strategy.

(An investor writing a covered call already owns the underlying security, that's the "covered" part of the transaction. By selling, or writing, a call option against his stock, he's limiting the upside to a price move higher, but generating income from the sale of the option. The option income lowers the risk -- and cost basis -- of the overall portfolio.)

Arthur resurrected the strategy from the dustbin of the 1970s and early 1980s, when the market couldn't break out of a sideways pattern. He said he'll surrender some upside if the market moves more than 20%, but he should outperform in a down-to-flat environment.

"People hear 'option' and run the other way, but this is so conservative," Arthur said. "It's like being a landlord who rents out his property while retaining the underlying building with an agreement to allow the renter to buy the property at a higher price."

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