History has taught us time and again not to take warnings lightly. Julius Caesar learned the hard way: He was admonished about the Ides of March, rejected the warning, and paid the ultimate price. T.S. Eliot also served up a warning of sorts in his poem “The Wasteland,” branding April “the cruellest month.”

As far as the stock market goes, May could be the more appropriate month to fear this year, one of the country’s brainier investment minds, Fred Dickson, suggests. It definitely won’t be a merry month for investors, he says.

The last time I chatted with Mr. Dickson was in October, when he predicted a robust kickoff to the 2006 market. With key market averages now trading at multi-year highs, the well-regarded chief investment strategist of D.A. Davidson & Company, a regional Northwestern brokerage power headquartered in Great Falls, Mont., has proved to be right on the money.

Now, though, Mr. Dickson’s ardor for the market has cooled. He theorizes that next month – when we’ll see a vigorous flow of reported firstquarter earnings numbers – is rife with danger. It’s not that he expects bad numbers: To the contrary, he figures S&P 500 earnings for the period will rise once again in the double-digit range, say 10% to 11% versus a year ago.

In this instance, the significant problem for the market, the former strategist at Goldman Sachs says, is that Corporate America – confronted with rising cost pressures from energy and assorted commodities, slowing consumer demand, and rising interest rates – will hold back or be extremely cautious in its guidance on second- and thirdquarter earnings.In response, Mr. Dickson says, investors will be disappointed and fear that there are problems ahead. This, in turn, should lead to a wave of profit-taking and stall the market, he says.

Another market dilemma looming is the May 10 meeting of the Federal Open Market Committee, at which the Fed is expected to boost the fed funds rate for the 16th consecutive time, to 5%. Investors, Mr. Dickson says, will be eagerly looking for an adjustment in the Fed’s policy statement, namely some sort of a signal it will pass on a rate hike in June. He figures the odds are 60-40 that the Fed will indeed issue such a statement. If it doesn’t, he says he thinks it likely that the market will immediately sell off anywhere from 5% to 10%.

Yet another of Mr. Dickson’s concerns is the stalemate between America and Iran – the world’s fourthlargest oil exporter – over Iran’s nuclear ambitions, which, he points out, raises the possibility of a military conflict and possible blockage of the Strait of Hormuz (bordered between Oman and Iran), through which 60% of the world’s oil is transported. “Iran is flashing its sabers, playing chicken with the Western democracies, and any supply disruption would have a major impact on the world’s economies and the stock market,” Mr. Dickson says. “This situation belongs on the radar screen.”

Our worrywart doesn’t see the market nosediving, but rather drifting somewhat higher, then running into headwinds and petering out in a Dow range of 11,500 to 12,000. The Dow closed Friday at 11,120.

In terms of the general market, he favors large-cap growth stocks, such as 3M; Hershey, which he views as a takeover candidate; selective technology companies, principally Symantec and Oracle, and a banking biggie, Citigroup, which he thinks is getting its act together (and which he owns). He also likes the energy sector, which has fallen prey to recent selling pressure, arguing, “We’ll probably see higher energy prices.” His energy strategy: nibble on natural gas companies, particularly Pioneer Natural Resources.

On the other hand, Mr. Dickson thinks investors should shun autos and homebuilders. Health care, a favorite sector of many investment professionals, but one that has proved to be disappointing – is another area he would avoid. His reasoning: litigation and product liabilities. “Until we see mergers and acquisitions, drugs, I believe, will stay under the radar screen,” he says.

What to buy and sell aside, the clear message here: If Mr. Dickson’s thinking has any merit, watch out. Friday’s wicked 96-point plunge in the Dow could be a harbinger of things to come.

dandordan@aol.com