Frontier Financial (FTBK), Macatawa Bank (MCBC) and TierOne Corp. (TONE).

Homebuilding

It all started with homebuilding. The bubble that supposedly saved us from the dot com crash was only a mirage.  Virulent speculation funded by easy credit resulted in excesses that are still being expunged.

The homebuilding group though is showing signs of life in 2008.  With many predicting the end of the cycle, homebuilding stocks have rebounded from their lows.  As a result, the sector is outperforming the rest of the market for the year.

Will that trend continue?  I think it is a safe bet.  Even with the rise, most stocks in the group trade for values below book.  Historically, such a state has been a terrific entry point for investors.

But, what if home values decline another 20% as predicted?  Certainly such a forecast would not bode well for builders.  Then again, buying at a price well below book value offers a fair amount of downside protection.

I think the water is safe to speculate.  A few names worth holding for the remainder of the year include Toll Brothers (TOL), Hovnanian (HOV) and DR Horton (DHI).  I would also keep an eye on companies that are leveraged to homebuilding like Home Depot (HD) and Lowes (LOW).

The markets are very turbulent at the moment.  The volatility makes for opportunities for traders and investors alike.  Don’t get discouraged if stocks go down, they probably will in the short term.

The best defense is often offense.  Buying on the dips or selling on strength, as I suggested with oil stocks, makes Rational sense to me.

If stocks do go down in value over the next few months, I would consider being very aggressive with your buying.  The action in the market reminds me of 2002.  Then stocks dropped over the summer culminating in a big fall collapse.

That washout created the next big rally.  I see the same thing happening this year.

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