4 Market Sectors Due for a Rebound

The last two months have been a roller coaster ride for the stock market. The Dow Jones has risen and fallen, and a lot of investors are unclear about whether we are still in a bull market or have regressed into a secular bear market. Either way, certain sectors have dropped dramatically and represent buying opportunities for value investors. Let's take a look at a few of the sectors most punished in recent weeks. 1. Commodities All of the gold bulls have run for the hills as the precious metal has retreated from the $1,900 an ounce level. Gold has seen a massive sell off down to $1,600, which is surprising considering how much fear there has been in the marketplace. Silver prices have tumbled as well along with other metals. Oil has not been immune to the selloff either as prices have fallen below the $80 mark and were as low as $75 a barrel. The global drop in commodities has created a buying opportunity for those who were looking for an entry point to get into oil and gold after their multi-year runs. 2. Metals The steel sector has been heavily sold off and the expectation of another recession has left investors fearful that demand will not return to this sector for a long time. Companies like U.S. Steel X and Nucor NUE are priced very low based on the potential earnings power they have in a normal economy. As long as the sentiment remains bearish on the sector, steel stocks will remain weak. However, it will be important to pay attention to manufacturing numbers to get a clue as to the outlook for these companies. The automakers can provide valuable guidance as to the overall demand for steel. 3. Technology The technology sector is a surprise addition to the list. This sector typically holds up well because technology companies usually have strong balance sheets. However, even strong companies like Apple AAPL and Intel INTC have recently seen investors sell their holdings. Fears loom regarding whether big technology names like Hewlett-Packard HPQ and Research in Motion RIMM can revive their struggling sales numbers. Netflix NFLX also has been a major drag on the sector as its stock has basically collapsed in recent weeks. 4. Financials Financial stocks are still the dogs of the S&P 500 as investors remain skeptical about the prospects of several big banks. Worries over pending lawsuits and potential capital raises caused big losses for Bank of America BAC, Citigroup C, Morgan Stanley MS, and Goldman Sachs GS. Prices of a number of the big banks appear cheap but could fall lower if the economy languishes further. Financial stocks are the epitome of uncertainty in a market that is in need of clarity, and investors need to be extremely cautious before going bottom feeding in this sector. Final Thoughts Sometimes the worst performers in a market in one quarter can turn out to be the best performers in the market the next. In fact, it could be happening now. But as with any investment, do your due diligence to best determine which of these value sectors hold the most appeal before investing. Mark Riddix is an investment management professional. He contributes market analysis and tips for investing in bull and bear markets on Money Crashers.