Four Groups That Should Outperform

This column originally appeared on RealMoney.com

Stocks and indices turned south last week, forcing newly minted bulls to question their blind faith in the nascent recovery effort. Although the January lows held up through Friday's closing bell, neither side can claim victory as we head into options expiration. Don't expect this volatile period to yield the perfect clarity that everyone is looking for.

Blue chips have outperformed since the January lows, with the S&P 500 index retracing about half the post-low rally, while the two Nasdaq averages gave up almost 80% before they turned higher on Thursday morning. These deep swings point to the development of a trading range between the broad highs and lows posted in the last three weeks.

Fortunately, this contraction phase should offer better trigger points for long and short entries. If you haven't noticed, the violent surges in recent weeks have made it very hard to find good positions, unless you're a momentum player. For the rest of us, these horrendous whipsaws are making it almost impossible to carry overnight risk. ...