The rally in The Dow, the S&P and the Nasdaq could very well continue into the new year as the indices were up more than 5 percent on the month.

The investor optimism in the market was at a six-year high and CBOE Volatility Index VIX was down by a third since May this year. Analysts say that the growth might continue as there are a lot of mutual funds aiming to go ahead of or match the performance of S&P 500 this year.

The low VIX indicates that the market expects low volatility. However, others are more cautious and point out that optimism is at its peak and it is usually fall after that with some predicting a correction I equities of about 5 to seven percent.

According to the latest Sentiment Survey by American Association of the Individual Investors (AAII), the level of optimism in the market rose 13.1 percentage points to 63.3 percent in the week to December 22. The level of pessimism was at the lowest since Nov. 24, 2005.

The AAII Sentiment Survey looks at the percentage of investors who are bullish, bearish and neutral on markets in the period of next six months.