Watch These Value Names for a Bounce

The wild ride in the market continues, as subprime worries stay at the forefront of the market and new stories of major problems continue to emerge. Today, investors were again hit with major problems at discount brokerage E*Trade .

I've said before that no one knows how deep this subprime and derivative situation really goes and that I would avoid this area of the market completely. Today we are seeing rotation into the financials, retailers and homebuilders and out of commodities.

Investors need to view this rotation into the above areas as an oversold bounce in a bear market for these sectors. These areas of the market have been very oversold, and a bounce here is quite logical.

With the sharp drop in commodities, it is amazing how many commentators have been quick to call a major top in this area. Commodities are on the other side of the coin in that they were very overextended and due for a sharp pullback. In fact, I stated last week that a likely dollar bounce would hit the commodity stocks.

I said in that column that there were too many analysts and commentators coming out of the woodwork to predict the dollar's demise at the same time it was hitting the lower level of its trend channel and was very oversold and extended to the downside. I also showed that the CRB index was at the upper part of its trend channel and was due for a correction.

Today, we are seeing that exact scenario developing in the market, and I am not sure that I agree with the talk that this is a top in the commodity and oil sector. In fact, as I said in my earlier column, I believe the corrective action could lead to some very good buying opportunities in this area of the market.

Let's take a look at some names that could bounce soon.

The iShares Morningstar Large Value ETF is sitting right at 52-week lows and a solid support level. You can see from the chart below that the price as tested the support level three times over the last year. This ETF has corrected more than 9% since its October highs and is certainly due for a bounce in some upside testing.