Whenever the market takes a beating, it's always interesting to first see which sectors have been hit the most, and second to see which have the greatest capacity for recovery. In April 2000, we saw a stunning switch in the market from large-cap growth stocks to small- and mid-cap value stocks, though there were many out-of-favor large-caps that also suddenly found buyers.

A great example of the latter was Anheuser-Busch (BUD). The moment that the NASDAQ 100 (NDX) began to fall apart in April 2000, BUD recovered from an 18-month slide, and it went on to double over the next 18 months. I will be looking for those kinds of turnarounds over the next couple of months, if in fact the market does begin to seriously deteriorate. The problem for this approach, at the moment, is that there are very few truly out-of-favor groups that appear to have the potential to pull a switch on the broad market. Commodities, foreign stocks, small-caps and basic materials have all done well in the past several years. The only really serious laggards are financials and real estate, and since they are at the epicenter of the credit crisis, it doesn't seem as if they will revive in a soft market.

So, I ran a screen for stocks that are down or flat over the past year but up in the past month and week. Some of the companies that look promising are Electronic Arts (ERTS), Johnson & Johnson (JNJ) and Applied Biosystems (ABI). Ones that could surprise us are banks Zion Bancorp (ZION) and Bank of America (BAC), banking processor Global Payments (GPN) and chipmaker Trident Microsystems (TRID). I'll keep an eye on these along with tobacco makers Philip Morris (MO) and two of my perennial favorites, Expeditors International (EXPD) and Gilead Sciences (GILD).