I have been watching the Investors Intelligence report more closely than usual lately. With the market climbing higher and with indices reaching overbought levels, the sentiment indicators become even more important.

The VIX is hovering down around the 15 level after dipping below this key threshold a few weeks ago. Extreme lows in the VIX tend to accompany overly bullish periods and thus the reason to watch the sentiment indicators more closely.

Last Wednesday’s Investors Intelligence report showed the bullish percentage jumped to 50.5 percent and the bearish percentage dropped to 22.6 percent, leaving the bullish to bearish ratio at 2.23.

While the ratio itself isn’t a red flag, it certainly seems to be heading higher.

What stood out about the report was the fact that the bearish percentage dropped to its lowest level since last August.

The lowest bearish percentage over the past few years is down at 17 percent and that was hit last spring as the market topped. There is still a way to go before we reach that level of optimism, but investors should be aware of the developments.

The indicators continue to stack up suggesting a correction is due. Investors should take heed and take steps to protect gains.