Back on Sept. 20, I wrote about the Investors Intelligence report and how the bearish percentage had exceeded the bullish percentage for the first time in a year. This past week’s report showed the ratio crossed another important threshold.

In the most recent report, the bearish percentage jumped to 45.2 percent while the bullish percentage dropped to 34.4 percent. This gives us a ratio of bulls to bears of 0.76.

The last time the ratio dropped below the 0.8 level was in March 2009, right as the market was hitting the bottom of the bear market.

During the last five years, there have only been a handful of readings where the ratio dropped below 0.8, so this gives you an idea of how bearish investors have become.

Also supporting the case that investors have become overly pessimistic is that the short interest on the NYSE has reached its highest level since 2009 with almost 15 billion shares sold short at this point.

With earnings season getting started this week and the sentiment indicators showing such extreme pessimism, I look for the market to rally sharply in the coming weeks.