During the last five months, we have seen several sentiment indicators move from extreme pessimistic levels to more moderate readings.

The Investors Intelligence report shows the bullish percentage has jumped from 34 percent to as high as 54 percent in recent weeks. The bullish percentage dipped to 51.1 percent two weeks ago and it stayed there last week.

The bearish percentage has dropped from 46 percent down to 25.5 percent last week. Last week’s bearish percentage was the lowest since last August.

The CBOE Volatility Index (VIX) was hitting 45 back at the beginning of October, but hit 16.10 in early February and has remained below the 22 level ever since.

In fact, the VIX hasn’t been above the 25 level since mid-December. The 25 level was the low during last fall’s market decline and it was the high during last spring’s consolidation.

The last sign of investor complacency is the overall market volume which has been in a downward trend since the low in October. While the market has rallied sharply since last fall, the volume indicates that few investors have reaped the rewards.

When I look at these three indicators collectively, they suggest that investors have become complacent or indifferent. Investors that are indifferent are sitting on the sidelines.

Complacent investors are the reason for the drop in bearish percentage on the Investors Intelligence report as well as the drop in the VIX.

These low levels of concern and fear make me feel the market is due for a correction. If there was more optimism, I would be concerned for a major pullback. As it stands, a minor correction seems to be what the market needs.