The latest Advisors Sentiment report from Investors Intelligence shows the bulls have edged up to 56.2% from 55.4% a week ago and 29.4% at the end of August. This equals the high of three weeks ago just prior to a stock market pull-back.

According to the report, the current data reflect "lots of funds have now been committed" and calls for caution, especially as the current level for the bulls is just below the 56.5% reading of December 2007. (As we know so well, stock markets peaked in October 2007 when the bulls hit a high of 62%.)

The spread between the bulls and bears of +34.9% "continues to hold at negative levels, similar to the readings shown in April 2010 when it was +37%. These are at the widest margin since the all-time high market back in October 2007 when the difference was +42%," said Investors Intelligence.

Markets that are overbullish, overbought and overvalued call for caution, especially with a headwind of rising long-term yields.

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