The number of investors with a bearish outlook plunged by more than a third in one week according to a widely followed investor survey released Wednesday, the largest amount of bears to throw in the towel in this poll since 2003.

The survey ending April 5 came as the indomitable Dow Jones Industrial Average

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[.DJIA  Loading...      ()   ] touched its highest intraday point since the two-year bull market began.

Middle East turmoil, an Irish bailout, fears of a municipal bond crisis, a nuclear disaster in Japan and an impending end to the Federal Reserve’s quantitative easing has failed to keep the market down this year. And the bears are simply done fighting the tape.

Bears collapsed to just 15.7 percent of those surveyed from a 23.1 percent part of the pie just one week ago, according to the weekly survey of financial newsletter writers by research firm Investors Intelligence. That 32 percent drop is the biggest in a single week since a 37 percent switchover in 2003, according to Bespoke Investment Group’s analysis of the II data.

“That action in the face of still ongoing negative news from around the world was certainly impressive and it reinforced the perception that US stocks were still offering value,” wrote Mike Burke and John Gray of Investors Intelligence, in the report. “A week ago we noted the speed of the (equity) move from the March lows didn't allow for much reaction from the advisors. However, another week of markets moving higher was clearly enough for many newsletter editors to make a shift.”

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Note that bullish investors now take up 57 percent of the total pie in this week’s survey, while the other 27 percent fit a category of investors who are expecting a pullback, but are still generally long-term bullish.

This survey is often used as a contrarian indicator, so a jump of this magnitude may give other bulls the chills on concern the long trade has gotten too crowded. After all, if everyone is bullish, who is there left out there to convert into buyers and lift the market higher?

Burke and Gray say this much in their accompanying commentary: “At the end of last August's market lows the bulls were as few as 29.4%, suggesting a time to buy. The latest reading suggests increased danger. At the October 2007 top the bulls were 62.0%.”

History shows that they may be onto something, as the market’s returns tend to slow or turn negative when sentiment reaches such an extreme.

“While the market has averaged modestly positive returns over the next one, three and six months” following 30 percent drops in bearish sentiment, wrote the Bespoke analysts in their report. “the returns have been below the average returns for all one, three and six month periods since 1975.”

In the 15 other occasions since 1975, when the number of bears in this survey collapsed by more than a third, the S&P 500 has averaged a 0.1 percent return one month out, a 0.8 percent return three months out and a 1.9 percent return six months out, according to Bespoke.

“The rise in equity prices today effectively ‘steals’ away part of the forward-looking one, three and six-month returns,” said Alan Zafran, a partner with Luminous Capital. “So the returns are positive, but most of the upside in the stock prices is captured immediately at the time that the sentiment has improved. Bottom line:  It’s tough to time the market.”

• Dennis Gartman: Central Banks Too Aggressive
• Stealth Sign that S&P Wants to Break Higher?
  

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.

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John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team.

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