3pm ET: Market Alert!: The "Sell in May" scenario may be kicking in!
Today's dramatic rise in the VIX and corresponding dramatic drop in the major averages lead by the DTX (a leader in market direction) could spell the end of the current rally. Long-term investors may wish to buy protective puts while traders should consider booking profits. Should the VIX close over 15, swing traders and bears may wish to initiate short positions or take positions in the levered bear etfs.

Here are some of the more popular 3x levered bear funds along with current approximate share price and today's percentage gains: Short Dow30 (SDOW, $40, +0.5%); Short S&P500 (SPXU, $23, +1.4%) and (SPXS, $10, +1.6%); Short Russell 2000 (small-cap stocks) (SRTY, $20, +3.8%) and (TZA, $32, +3.8%). These are all higher risk plays so please monitor them closely and set a mental stop-loss before you initiate a position. More conservative investors can use the unlevered total bear market fund (TOTS, $26, +1%). While the bears are playing, the bulls should be busy building their shopping lists for when the market turns around. Let's hope that's soon!

Subscriber Notes: There are no new entries as I'm waiting to see in which direction the market decides it wants to move.

4:00pm ET: Well, the major averages managed to hang in there to makr this the nineteenth successive Tuesday where they are closed in the green. However, the market leading Transport Index (DTX) was the noticeable laggard and the fact that the Trin and the VIX are both rising could spell timeout for the market in the near-term. Tomorrow, the ears of everyone on Wall Street will be pinned to Bernanke's testimony before Congress listening for any shred of a change in monetary policy. Market tone will be guided by the testimony and could either be very quiet or very volatile, depending on what's being said. Could be a profitable day for the day traders or a good one to sleep in. In remembrance of testimonies past, I might just do the latter.

Today's Market Highlights: Marine shippers on the move
The Guggenheim Shipping etf (SEA, $18) gapped out of a five month trading range yesterday on over four times normal volume. Not only did it handily break near-term resistance at $17.50, it also took out long-term resistance at $18. This etf is used as a proxy for the famed Baltic Dry Index which is viewed by economists as a leading indicator of future production and economic growth. The SEA has lagged the overall transportation index (the IYT is an etf proxy for this index) but it appears as if it's now trying to play catch-up. The shippers in particular have suffered much more than their land-based peers and investors are trying to rectify this situation.

Today's biggest movers were Genco Shipping (GNK, $2.10) and Frontline (FRO, $2.46). Both of these gained 17% and 12% respectively as investors piled in. Perhaps not so coincidentally, these two names are also the ones that saw the biggest drops in share value since their 2010 highs, down over 90% from their peak values. Although they're showing signs of life, they do face some near-term resistance--for Genco that's at $2.50 and for Frontline it's in the $2.75 to $3.00 range. A break above those levels could mean clear sailing for a while.

While Genco and Frontline appear poised for growth, they are not major holdings of the SEA. The fund's biggest holdings are foreign-based companies such as Maersk (16%) and several others which only trade on foreign exchanges. US exchange traded members include Navios Maritime and Teekay Tankers, both of which have more than one trading entity. For example, Teekay is listed under Teekay Corp (TK), Teekay Offshore (TOO), Teekay Tanker (TNK), and Teekay LNG (TGP). These are different businesses under the same corporate umbrella and detailing their differences is the subject of another article. My point today is just to alert you to the potential growth opportunity in this unloved industry group.

4:00pm ET: The market melt-up appears to have hit a cool spot as selling pressure heats up. At the close, the VWAPs (a measure of institutional buying and selling) on both the positive and negative sides were exactly equal and at elevated levels indicating that the bulls and the bears are duking it out. A pop in the VIX reflects the rising bearish sentiment. Two events this week could push this evenly-weighted bull/bear seesaw to favor one side.

The first is Fed chairman Ben Bernanke's testimony to Congress on Wednesday. This will be important in setting the tone for the markets (particularly the dollar, equities and US treasuries), as traders hunt for clues on when the Fed is likely to ease its rate of asset purchases. The second is the Durable Goods Orders coming out on Friday. Orders are considered a leading indicator of manufacturing activity and we'll need to see some good numbers as the recent Empire State manufacturing numbers and the Philly Fed numbers were disappointing.

Today's Highlights: Solar stocks continue to burn
On Friday we noted the breakout in the Guggenheim Solar etf (TAN, $25). Today, the Market Vectors Solar etf (KWT, $50) followed in its footsteps. The entire space popped on JA Solar's (JASO, $9.5) record earnings announcement showing huge demand for its solar cells in Japan. The news surprised everyone and boosted share price by a whopping 70% on nearly 29 times normal volume! As a rising tide lifts all boats, nearly every stock in the space experienced a surge in both price and volume. Other big winners include Canadian Solar (DSIQ, $9, +17%), LDK Solar (LDK, $1.8, +20%), Hanwa Solar (HSOL, $1.6, +31%), Trina Solar (TSL, $6.8, +20%), Renesola (SOL, $2.5, +18%), and Yingli Green Energy (YGE, $3.1, +13%). Volume on all of these issues has been expanding--a sign that investors and institutions are taking notice. Technically, the charts of YGE, TSL, LDK, and CSIQ are the most compelling, but as always, do your own research first. Adding one or two of these stocks (or one of the etfs) could provide that ray of sunshine that perks up your portfolio.

4:00pm ET: The market continues to melt up and it appears as if there's more room to run as the VIX continues to fall and the Transports (DTX) continue to lead. Most of the sectors continue to hit new highs with the notable exception of pharma and healthcare which are taking a much needed break.

Today's Highlights: Metals continue to slide with some hitting new yearly lows. Silver (SLV) and the Gold Miners (GDX, GDXJ) were among today's biggest losers in this space while Gold (GLD, IAU) is testing major support at the $1300/ounce level ($130 on the GLD and $13 on the IAU). Commodity based currencies Aussie $ (FXA) and the Canadian $ (FXC) ranked among the biggest currency losers as a result.

Surprisingly, oil and clean energy are hanging in there. Today, the Oil & Gas Explorer etf (IEO) decisively broke through major resistance at $75. Its next test could come at the $80 minor resistance level and should it pass that, a move to the $87-$90 level would be next. Closely following in its footsteps are the Oil & Gas Services funds (OIH, XES) which could break out as soon as tomorrow. The oil and gas commodities themselves aren't looking so bullish but that situation may change soon, especially with the summer driving season looming upon us.

The clean/alternative energy space is definitely on the move. We previously noted the rise of badly beaten down solar stocks and today they again led the alt-energy pack. The Gugghenheim Solar etf (TAN) recently broke out of a year long base. The fund gained another 5.25% today.

Stocks poised for further upside
From time to time I post stocks that are rallying on increasing volume. What this means is that institutions are starting to take notice and a further rise in the stock (barring any downturn in the market) is typically the norm. Today I'll be mentioning two such stocks.

The first is Rite Aid (RAD, $2.8). The company jumped on better than expected earnings on 4/11 and volume since then has been increasing. The stock has been consolidating for the past few weeks but that all changed today when it jumped over 7% on twice normal volume. Those in the know are saying that this company's metrics are improving and that it is currently undervalued compared with its peers. It looks like Wall Street agrees.

The second is Tearlab (TEAR, $10.16). The company enables eye doctors to test tears for a range of biomarkers. The stock has been rising for more than a year and a half as volume slowly increased. However, the volume has been stepped up substantially in recent months. The company recently beat earnings estimates on expanding margins causing not only a jump in share price but a jump in volume.

The two above-mentioned stocks are worth your consideration and as always do your own research before investing. Enjoy this lovely spring weekend!

Subscriber Notes: There is one new Stock Darling.

4:00pm ET: It looks as if yesterday's internals didn't lie because we got our expected pullback today. The question is whether or not today's drop is a one day event or if we're in for more downside. Judging from today's leadership to the downside by the Transports (DTX), tomorrow could start off on the wrong footing but we may not stay in negative territory for long. The volatility index (VIX) should have made a bigger move up today considering the negativity didn't react much indicating that the bulls are still in control. Also, the sharp reversal to the upside going into the close indicates short-covering. This shows us the bears are afraid to hold short positions for any length of time.

So is there an upper limit to this market? Some stock pundits like Peter Lynch believe in the "Rule of 20" which states that a market equilibrium P/E ratio should equal 20 minus the inflation rate (given by the CPI). Using the latest inflation figure of 1.1 would imply an equilibrium P/E ratio of approximately 18.9 times earnings. Calculating the upper bound of the market depends on which earnings multiple you use: the trailing 12 month, the 12 month forward estimate, or some sort of average value. Using $86 as the trailing earnings level on the S&P (from Standard & Poors) and $114.5 as the forward estimate (from Factset Research) gives us a range in the SPX from a low of 1625 to a high of 2165. I'm not an expert on this topic but if we're to assume the trailing earnings number, then the market is already overextended. On the other hand, if we're to assume the forward earnings figure, then the market has a long way to go before it corrects. A lot of this will depend on when the Fed decides to start raising interest rates which many feel could be by the end of this year.

The moral of the story? Be vigilant and don't become too complacent. There's still half of the month left for the "Sell in May" scenario to unfold. Beware of the Bear!

Subscriber Notes: There is one new Stock of the Day.

Today's notable market action: Toot, toot, hey, beep, beep!
Commodities continue to slump as gold and silver miners continue to sell off, some to their lowest levels not seen in years. As an example of just how far they've fallen, consider gold miner Allied Nevada (ANV, $8) which has lost more than 80% of its value since mid-October. The Gold Miner etf (GDX, $27) and the Junior Gold Miner etf (GDXJ, $11) have lost 55% and 40% respectively over the same time period. Just because these issues are well off their highs doesn't mean now is the time to step in and buy--far from it. Their charts show no signs of basing and I'd wait until they break out to the upside before initiating a long position. Remember, never try to catch a falling knife!

On the flip side, automakers were among today's winners as the following issues motored to new highs on heavier than normal volume: Fiat (FIATY, $7), General Motors (GM, $32), Ford (F, $15), Isuzu (ISUZY, $86), Nissan (NSANY, $23), Honda (HMC, $41), and Toyota (TM, $127). Most of these tacked on 2-3% to yesterday's share prices except for Isuzu which jumped 14% on three times normal volume. Most of these companies are still undervalued with P/E's hovering around 10 except for Honda and Toyota with P/E's of 19. (Fiat has the lowest P/E value of 6.) Aside from Fiat and GM, all of the above pay a dividend (most around 2%). Adding some wheel makers to your portfolio could definitely give it some traction, and that's something to toot about!

[Note: For a little topic apropos background music, check out this classic music video.]

Enough auto metaphors. That's it for today.

Subscriber Notes: There is one new Stock Darling.