After a very choppy and volatile start to the year, the S&P has now gained ground in each of the last three weeks. With the rally, investor sentiment has made dramatic shifts toward the bullish side.

The AAII Sentiment Survey from last week showed that the bullish percentage jumped from 40% to 47% while the bearish percentage dropped from 20.3% to 17.9%. This put the ratio at 2.63 after being at 1.10 just two weeks ago.

The 1.10 reading was the lowest it had been since last August and now it is right back up to where it was at the end of December—before the volatile period.

The CBOE Equity Put/Call ratio saw each daily reading from last week come in under 0.60 and that is the first time that has happened since the week of August 22. The low readings caused the 21-day moving average to drop to 0.6414 and the weekly decline of 0.267 was the worst weekly drop since last August.

The CBOE Volatility Index (VIX) fell a little farther last week, but given the changes in the other sentiment indicators, it wasn’t too bad. The indicator closed the week at 14.30, 2.65% lower than the previous week.

While I understand shifting to a more bullish stance when the market rallies for three straight weeks, but the abruptness of the changes has me concerned.

I wouldn’t be surprised to see a little profit taking in the next week or so and that should cause a slowdown in the sentiment shift.