Wall Street Pessimists on Red Alert this Summer

• E-mail Terry Keenan

Forget "summer rally" — with the Dow Jones Industrial Average up a remarkable 1,400 points since mid-March, this market has been a spring spectacular.

It's little wonder that finding a bear these days on Wall Street is about as difficult as scoring a $40,000 summer rental in the Hamptons. As the industrials have clocked more than two dozen record closes this spring, one stalwart bear after another has capitulated.

The most notable to do so this month was none other than Richard Russell, dean of the Dow soothsayers and publisher of the 50-year-old Dow Theory Letter. Russell has not only a long, but also an extremely enviable, record for market timing and has been bearish since 1999 — and now he is now telling subscribers that an "unprecedented world boom lies ahead." So much for sell in May and go away.

It's such soaring optimism — let's throw in a $70 million Warhol for good measure — that has the few remaining pessimists on red alert these days. They see a severe market pullback on the horizon. What could be the trigger? Here are a few scenarios:

• $4.50/gallon gasoline: Yep. It's just a dollar away in many areas of the nation and that was before crude oil prices made their latest spike. Huge profit margins for oil refineries is the main reason behind the post Katrina-like prices. Economists say $4.50 is where Americans really start to feel the pain at the pump — i.e. the sort of pain that ripples through the economy.

• China Syndrome: In February, for the first time in history, a market meltdown in Shanghai triggered a global stock market sell-off worldwide. Was this a dress rehearsal for more violent reversals in the months to come? If it was, watch out. Fred Hickey, editor of the High-Tech Strategist, notes that back in February there were few places for investors to hide.

• Retail Malaise: Will the U.S. consumer ever tire of shopping? So far it's been a sucker's bet — consumer spending in the U.S. hasn't declined since the fourth quarter of 1991, according to Merrill Lynch. But there are troubling signs on the horizon. In addition to the surge in prices at the pump, the housing slump is clearly adding to the weakness at the malls and the auto lots. Last month retail sales actually fell by .2 percent. With U.S. shoppers accounting for fully 20 percent of all growth in the global economy, that's not a comforting number.

• Relentless records: Sure, it's fun reporting a string of stock market records day after day, but history shows a relentless pattern of new highs in a short time span can be more of a negative indictor than a positive one (think 1987, the winter of 1999 to 2000, or Japan circa 1989, and you get the picture).

• Expansion is getting old: As Alan Greenspan has been warning, the economic expansion that began in 2001 is getting very long in the tooth. When it comes to a recession, the economy is living on borrowed time (and more to the point, borrowed money).

Taken in isolation none of these factors may merit caution when it comes to stocks, but given the level of giddiness in this very merry month of May on Wall Street, it's worth keeping a finger on the sell button.

Terry Keenan is anchor of Cashin’ In and is a FOX News Channel business correspondent. Tune in to Cashin' In on Saturdays at 11:30am and find out what you need to know to make your money grow and keep what you already have!