Market Preview: Risk Appetite Spoiled

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NEW YORK ( TheStreet) -- It's starting to look like all anyone is going to do is sell in May.

The first day of the month was a sunny rally but the weather's been ugly since then. The Dow Jones Industrial Average is down in eight of the past nine trading sessions, losing 4.4% since closing at 13,279 on May 1.

The S&P 500 finished at 1406 on May 1, and has now surrendered 4.8% since then, while the Nasdaq rallied in the first two sessions of the month, closing at 3060 on May 2 but it's subsequently pulled back the most, losing 5.1%.

And while it doesn't take a chart watcher to guess that such consistent selling pressure isn't the hallmark of a healthy stock market, the finish below 1340 on by the S&P 500 on Monday is worrisome, according to Mark Arbeter, chief technical strategist at S&P Capital IQ .

"While we have been calling for new recovery highs by the major indices later in the second quarter, that call is now on thin ice," Arbeter said in written commentary on Friday. "We think any closing breakdown below the recent lows in the 1,340 region could usher in additional downside, with the index at least dropping back to the 1,300 region, and potentially further."

He also sees some troubling signs in the action in certain other markets and sectors.

"One important and ongoing concern is that many global indices have rolled over into major pullbacks or corrections, a warning for U.S. stocks," Arbeter wrote. "Cyclical sectors have been underperforming for months, while we are seeing outperformance by the defensives. This, in our view, is also a warning for stocks. In addition, many of the market leaders have rolled over into corrections, not a good sign, in our view. We think it will be important to see some stabilization in the U.S. as well as global indices in the near term, and if we don't, something more ominous may be lurking."

Monday's weakness was a particularly bad way to start the week because it wasn't so much a reaction to a single event but rather the gradual worsening of the quality of news on a number of fronts, mostly in Europe, of course. The signs that Wall Street's risk appetite is pretty well spoiled are seemingly everywhere with the 10-year Treasury bond's yield down at 1.772 at last check and gold beaten down below $1560 an ounce.

Europe will again be in focus on Tuesday with France's new socialist president Francois Hollande set to meet with German Chancellor Angela Merkel. There's also a goodly amount of economic data due from across the pond, and Moody's has already downgraded a bunch of Italian banks .