Even though the market bounced back from three big days of selling with four days of gains in five trading days, the sentiment indicators made big shifts toward the middle of their readings.

The Investors Intelligence Ratio experienced one of the biggest one-week declines of the past year.

The bullish percentage plunged from 46.8 percent to 41.7 percent, and the bearish percentage jumped from 21.9 percent to 25 percent. This put the ratio at 1.668, which is the lowest reading since last November.

The other big shift came from the 21-day moving average on the CBOE Equity Put/Call ratio.

This indicator has risen from a low of 0.5843 on May 21 to a reading of 0.6784 last Friday. This is the highest reading for the indicator since April 23.

The shifts in the sentiment indicators coincide with two developments in the charts. The Standard & Poor's 500 has closed the last eight days below its 50-day moving average for the first time since last December.

It was also last December when the S&P 500 experienced consecutive weekly closes below its 13-week moving average.

These developments in the sentiment indicators and the technical picture are coming just ahead of the second-quarter earnings season that kicks off next week.

It was just ahead of the earnings season last fall that the S&P 500 initially dipped below the 13-week moving average and it is also worth noting that the sentiment indicators were experiencing similar patterns.

Based on these observations, we may see a few more weeks of elevated volatility and another step lower before stocks bounce back.