John Bollinger is among the industry's most respected technical analysts. In the "Contrary Corner" of his Capital Growth Letter, the advisor suggests scaling into a package of three home building stocks.

He explains, "For this exercise, I've looked at 20 home building stocks, each stock based on its monthly charts. Yes, I know that seems like a sacrilege in the day and age of hyperactive short-term trading, but we are taking the long view here.

"I then looked at the percentage drop from the stock's most recent swing high and then the number of months from the peak to the trough or the present if a swing low has not been established. I then looked to determine if there is a swing low in place.

"After reviewing these 20 homebuilding stock, I've chosen 3 candidates to start. I like the idea of selecting a fair number of small positions that add up to a normal sized position, then eliminating the non-performers as time passes while keeping the winners. We are choosing WCI Communities (NYSE: WCI), Standard Pacific (NYSE: SPF) and St. Joe (NYSE: JOE) as our first commitments."

Each day, Steven Halpern's TheStockAdvisors.com features the latest stock picks and investment ideas from the nation's leading financial newsletter advisors.

"Our thesis remains that we are in a bull market for energy," says John Bollinger in his Capital Growth Report, who notes that his long term strategy is to acquire energy assets on pullbacks.

He explains, "Though we may be near or at capacity production in oil, new supplies of industrial commodities will continue to come on line. The critical dimension is demand, which is strong and growing."

As a leading technician, he points out, "At its heart, technical analysis is but a way of quantifying supply and demand and here as in many other markets, demand has outstripped supply as is clearly evident on the charts.

In his view, he states, the demand curve for energy has crossed up through the supply curve – supporting a bull market. For investors, he suggests that the assets to buy now to invest in this trend can be any of the many energy ETFs, big international oil companies, exploration and drilling outfits, and natural gas stocks.

In addition, while he admits it is "politically incorrect," he also believes this is the time to invest in coal.

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Although advisors participating in the Top Picks Report were limited to two stock picks, we allowed John Bollinger to select three, in compliance with the strategy employed in his The Capital Growth Letter.

He explains, "My strategy is not about stock picking in the sense of what will do best in 2007. Rather we ask what is doing well now, invest in that, hold for as long as the performance is satisfactory and then move on. This method is known as the cast-out method of relative-strength investing.

"As an example, let's take a look at our ETF Sector Portfolio. After a careful screening process we have selected 27 sector ETFs as candidates for this portfolio. Let's suppose that we are just starting out. To get going we would purchase the top three ranked ETFs and hold them for as long as they are ranked better than the middle of the list.

"When one of the funds drops below the midpoint of the ranking, it will be sold and replaced with the highest-ranked fund that is not already held in the portfolio. We use daily data and conduct reviews on a weekly basis. There are several other rules, but that's the essence of the program.

"We have found this cast-out approach to relative-strength investing delivers the sort of performance that we are after in our practice, and that it has an acceptable risk-reward relationship. As of December 18th, our top three ranked sector funds are: iShares Global Telecom (ASE: IXP), iShares Select Energy (ASE: XLE), and Powershares Dynamic Media (ASE: PBS)."