Updated from 11:42 a.m. EST

A tumble in bullish sentiment in a widely followed Wall Street survey Wednesday could explain the market's recent choppiness, but it stops short of flashing a screaming buy signal to most contrarian investors.

New figures from Chartcraft.com's Investors Intelligence survey showed a 13% drop in the number of respondents calling themselves bulls between March 12 and last Friday, and a corresponding spike in those expecting a market correction.

For the week ending March 19, Investors Intelligence reported 45.5% bulls, 23.2% bears and 31.3% looking for a correction.

This week's numbers highlight a reversal from the March 12 results, which showed 52.5% bulls, 21.8% bears and 25.7% in the correction camp.

"It's probably an accurate reflection of the current mood on Wall Street, even despite today's positive durable goods number," said Robert Pavlik, portfolio manager at Oaktree Asset Management. As a contrarian indicator, however, "the bear camp percentage has to increase much more before we are going to get a real indication of a turnaround," Pavlik said.

Published every Wednesday morning, the Investors Intelligence survey has been widely adopted by the investment community as a contrarian indicator since its inception in 1963. Investors Intelligence studies over 100 independent market newsletters and assesses each author's current stance on the market: bullish, bearish or correction.

Investors looking for a correction are defined as being "still optimistic on the markets but are waiting to buy at lower levels on a pullback," says Investors Intelligence editor John Gray.

Despite the reduction, Richard Williams, director at Next Generation Equity Research, finds the proportion of bulls in the survey still alarmingly high.

"The proportion of bulls to bears is 66% when you subtract the correction numbers from the survey," says Williams (i.e., 45.5% is roughly 66% of the 68.7% of respondents who called themselves either bull or bear). "And by historical standards, this means sentiment remains in the danger zone."

Confirmation of the survey results could come Thursday morning when the American Association of Individual Investors' sentiment survey is released.

For the week ending March 18, AAII reported investor sentiment as being 38.6% bullish, 26.32% bearish and 35.09% neutral as to the stock market's near-term direction.

AAII surveys its membership of 150,000 investors on a weekly basis to determine the percentage who are bullish, bearish and neutral on the stock market in the short term.

Randy Diamond, sales-trader at Miller-Tabak, carefully tracks both surveys and says the decline in bullish sentiment should not be a shocker for anybody paying attention.

"The bull percentage has been way too high for a while, so we were expecting a decrease for a few months," says Diamond.

Bullish sentiment has most definitely tailed off in the AAII survey since it hit a three-month high in late January of 69.51% vs. 13.41% bearish and 17.07% neutral.

Diamond is not expecting a change in trend for tomorrow's AAII number.

"Going forward, there's still too much complacency out there on a broader scope," Diamond said. "But please remember that these are not great short-term indicators."

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