Dr. Kris'  Instablog

Today is the last day for the Sell in May scenario to kick in and it appears as if it officially has--that was a close one for da' bears! The VIX not only closed over 15--the top end of the bullish complacency range--but over 16. Also, the market-leading Dow Transports (DTX) broke recent support at 630. Not only are the bears taking control but they seem to be doing so with a vengeance. All of you with long positions may wish to begin lightening up or at least buy some put protection while it is still relatively cheap.

Of course, today could just be a lot of folks taking end of the month profits but I sure don't think so. There are too many technical divergences that can't be ignored. For further proof, please read this article and draw your own conclusion.

Also, for any of you with shares in Lionsgate Entertainment (LGF), now would be an excellent time to begin taking profits. The chart is looking extremely toppy and its valuation has become quite lofty (P/E of 83). The stock has gained over 70% since it was recommended (for the second time) on 10/31/12. If you had bought into it back then, you should be pretty happy with your gains--just don't let them turn into a loss! (Dr. Kris is wagging her finger at you.)

That's about it for now. Dr. Kris is starting her weekend early--shrimp on the barbie anyone?

4:00pm ET: We have one more day before the "Sell in May" scenario can officially kick in...and if the sell-off in the last half hour of trading is any indication, it appears as if the bears are making a last minute charge towards the bulls' end zone. The question is whether the bulls' offensive is strong enough to stave them off. Tomorrow is sure to be an interesting trading day!

Today's Market Highlights: Investors vying for value
Wary of getting burned in over-valued stocks (remember the dot-com bubble?), investors are flocking to those industry groups that are still undervalued. Today, many new highs were seen in the regional banks, insurance companies, and automotive makers and their component suppliers. Mentioned here yesterday as undervalued buys were Ford (F) and General Motors (GM). Both tacked on nearly 2% to yesterday's values. Add Fiat (FIATY, $7.80) to that group which jumped over 5% to reach a new high today. Rumor has that it is planning on buying the 41.5% of Chrysler stock it doesn't own and then spinning it off as an IPO here in the US. This could put pressure on Ford and GM, assuming they can Chrysler can manage to make a decent car.

In other noteworthy news, the gold miners (GDX, GDXJ) reversed direction. They've been badly beaten down and many may be tempted to buy into them at these levels. However, I'd wait until they break upside resistance before committing funds: for the GDX that would $32.50, and for the GDXJ that would be $13.5. See y'all back here tomorrow for what could be an exciting end of the month action.

Subscriber Notes: There is one new Stock Darling and a new Stock of the Day was added after hours yesterday. Please check these out on the website.

4:00pm ET: It appears as if the "Sell in May" scenario is kicking in. The major averages continued yesterday's slide with the Dow Transports (DTX) leading the way. The VIX opened the day over 15--the bull/bear dividing line--but managed to end the day below it. While these two indicators in and of themselves aren't yet in bearish territory, the fact that the Trin stayed below 0.60 is telling us that there's little upside left. The bull/bear changing of the guard won't be complete until the DTX closes below its recent support level of 630 and the VIX closes above 15--a situation that could happen as early as tomorrow.

However, this doesn't mean that we're in for a major correction. A period of consolidation in any rally is a good thing.

Today's Market Highlights: Automakers continue to roll
Non-Japanese automakers jumped today with both Ford (F, $15.63) and Tata Motors (TTM, $28.33) making respective gains of 2.3% and 5.5% on heavier than normal volume. Ford's senior U.S. economist, Jenny Lin, announced an 18% jump in Ford's April sales following an impressive first-quarter earnings report. Many feel that the company is ideally situated to take advantage of expected acceleration in the U.S. and Chinese auto markets over the next couple of years including an analyst at Citi who raised his price target by $2.75 to $18. The increased price target in his "Buy" rating was the result of meetings held with Ford's management who cited strong North American sales and rising optimism about increasing European sales. All of this good news caused Ford stock to break out to a new yearly high. Hitching a ride was General Motors (GM, $34.05). Unfortunately, it wasn't able to close at a new high, but almost.

The other automaker popping a wheelie today was Indian-based Tata Motors (TTM, $28.33)causing the stock to complete an inverse head-and-shoulders pattern. The reason was a better than expected earnings report from its luxury Jaguar Range Rover division. Should the stock best its shoulder line at $28.50, a rise to $34 is in the cards, providing it can hurdle major resistance at $31. Note that all of these automakers are trading at low P/E's relative to the overall market (8 for TTM, 10-11 for F & GM; 16-18 for the S&P 500). Considering the good recent earnings reports and overall rosy outlook for the group (we've been touting the automakers for a while), adding one or two to a diversified portfolio should be considered. (Out of the above group, I like Ford's prospects the best.) Note that both Ford and Tata pay small dividends. One caveat, though, is that a rise in the dollar could put a crimp in the earnings of the domestic automakers.

Subscriber Notes: A new Stock of the Day candidate will be out a little later.