The S&P 500 extended its winning streak to seven weeks last week, but that didn't prevent the sentiment indicators from shifting away from their bullish extremes.

The AAII Sentiment Survey saw its bullish percentage drop from 52.1 percent to 42.7 percent, while the bearish percentage increased from 20.8 percent to 25.9 percent.

The combination of changes led to the ratio of bulls to bears falling to 1.65 from 2.50. That is the biggest decline in the ratio since January.

The 21-day moving average on the CBOE Equity Put/Call Ratio moved from 0.5895 to 0.5938 over the course of last week, the first time since mid-October that the moving average has risen from one week to the next.

The lone sentiment indicator of the main three that I track that didn't move toward a more cautionary stance was the CBOE Volatility Index (VIX). The VIX fell more than 11 percent to a reading of 11.82.

This was the first time since the selloff started in mid-September that the VIX has closed a week below the 12 level.

Personally I find it encouraging that investors are backing off on their bullish sentiment. With the market overbought amid the winning streak, I would rather see them exercise some caution.

When the market is overbought and investors continue to increase their bullish view, you run the risk having an implosion.