There has been a lot of talk lately about the inflationary implications of the falling dollar, rising commodity prices, and rising interest rates. There is also a number of negative divergences in market breadth indicators. It certainly looks like all of those bearish influences have finally hit the stock market this week. A couple of bearish reports released today didn't help as well. Consumer confidence fell to a seven-month low and import prices rose to the highest level in seven months. The latter number just intensified fears of rising inflation. Now we're in the month of May which is traditionally the start of the weakest six months of the year. From a seasonal standpoint, this would be a logical time to expect some serious market selling. That's also true from a technical charting viewpoint.
A more serious sell signal would be given by an S&P 500 close beneath its mid-April low at 1280. The Nasdaq market has already broken its 200 day line support level.
Conservative investors might consider moving some money out of stocks and into a money market fund.
