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We’ve studied the characteristics of bull and bear markets going back decades, and we know that bear phases often end with big selloffs caused by scary, headline-grabbing news. The Bear Stearns debacle certainly qualifies, and this financial panic could result in a sustainable low. So if you have a huge cash position (60% or more of your account), buying a few shares here or there could work out well. Just be sure to stick with what’s working–namely oil and natural gas stocks, as well as some steel names that are acting better–and remember to cut all losses short. Overall, you should stay in a mainly defensive posture until we see real signs of improvement. Our favorite stock this week is Steel Dynamics (STLD). The company raised its earnings guidance last week and the sector as a whole seems to be gaining sponsorship. We think you can buy a little on weakness.

Stock Name	Price	Buy Range	Loss Limit
DVN (DVN)	0.00	97 1/2 - 101 1/2	-
EAC (EAC)	0.00	35 1/2 - 38 1/2	-
HLF (HLF)	0.00	43-46	-
NFLX (NFLX)	0.00	31-33	-
NUE (NUE)	0.00	66-70	-
SLW (SLW)	0.00	17 1/2 - 18 1/2	-
STLD (STLD)	0.00	62-65	-
SWC (SWC)	0.00	15 1/2 - 18	-
SWN (SWN)	0.00	62-66	-
WDC (WDC)	0.00	29-31	-

The past couple of weeks have brought a distinct change in the market’s behavior. While the major indexes continue their mild advance, beneath the surface, we’re seeing more and more stocks acting in a healthy manner, including plenty that have gapped up on earnings. That tells us that big investors aren’t waiting patiently to build positions—they’re buying with both hands, driving the market’s leading stocks higher. There will be bumps in the road, of course, but you should be putting money to work in the market’s leading stocks at prudent buy points. This week’s Top Ten contains something for everyone—some commodity, some growth, some big, and some small. Our favorite of the week is Gafisa (GFA), a fast-growing Brazilian homebuilder that shot out of a nice, tight pattern last week. Earnings are due out tonight, but we think you can buy some around here.

Stock Name	Price	Buy Range	Loss Limit
CNQR (CNQR)	0.00	36-38	-
FEED (FEED)	0.00	17-20	-
FST (FST)	0.00	56-60	-
GFA (GFA)	0.00	42-46	-
KSU (KSU)	0.00	42-46	-
MA (MA)	0.00	260-280	-
MMR (MMR)	0.00	24-27	-
PWRD (PWRD)	0.00	29-32	-
WLT (WLT)	0.00	73-83	-
X (X)	0.00	155-165	-

Last week we opined that the headlines filled with bad news about Bear Stearns had the potential to mark a major low in the market’s bear phase. And this week, we’re more optimistic that’s the case – hence the Market Monitor above, which has shifted to neutral. Of course, the market is always a challenge, and last week brought rotation out of many commodity stocks, and into some other groups, such as financials and retail. In our view, the commodity stocks are a mixed bag (some are still fine, others, not so much), but the overall market action is encouraging, so you should be looking to put some—but not all—of your sidelined cash to work. This week’s list contains a mix of growth stocks, turnaround stories and some familiar faces; a few have broken out of good-looking basing patterns over the past few days. Our favorite of the week is Kirby (KEX), a shipping company that has staged an extremely powerful breakout in recent days, thanks to a great earnings report.

Stock Name	Price	Buy Range	Loss Limit
OFG (OFG)	0.00	20 - 22	-
PRGO (PRGO)	0.00	33 - 37	-
TUP (TUP)	0.00	36 - 39	-
URBN (URBN)	0.00	31 - 33	-
XEC (XEC)	0.00	47 - 52	-
CSX (CSX)	0.00	53 - 56	-
HCBK (HCBK)	0.00	16 - 18	-
JOE (JOE)	0.00	39 - 45	-
KEX (KEX)	0.00	52 - 55	-
MA (MA)	0.00	210 - 225	-

Overall, we continue to see many signs that the market is transitioning from a bear phase to a bullish phase—sentiment is horrid, stocks have refused to break down on the worst of news (i.e., Bear Stearns) and the indexes have held above support for many weeks. However, when it comes to buying individual stocks, there are few options—steel and some oil stocks remain in favor, but for every stock that pops its head up, there seems to be another that gets slapped down. Bottom line, it’s still not a time for aggressive buying, but picking up a few shares of potential leaders during pullbacks can still work out. Just don’t go overboard! This week’s Top Ten is commodity-heavy, with a few growth-oriented names sprinkled in. Our favorite of the week is Comstock Resources (CRK), which staged a good-looking breakout last week. We think you can pick up a few shares on weakness.

Stock Name	Price	Buy Range	Loss Limit
CLF (CLF)	0.00	110-125	-
CLR (CLR)	0.00	29-33	-
CRK (CRK)	0.00	35-39	-
ILMN (ILMN)	0.00	68-74	-
MT (MT)	0.00	79-83	-
OI (OI)	0.00	53-56	-
PQ (PQ)	0.00	15-17	-
RIMM (RIMM)	0.00	130-140	-
STLD (STLD)	0.00	31 1/2 - 34 1/2	-
TNE (TNE)	0.00	21-25	-