The Fed's delay in cutting the overnight lending rate has hurt these banks, which have found themselves under pressure due to the problems of the housing market. Non-performing loans and delinquencies are now Job One.

Merrill Lynch Research still likes Marshall & Ilsey (MI), and a few others, but they have sells on a growing list that includes Comerica (CMA), Commerce Bancorp (CBH), and (from the West and Midwest report) Cathay General Bancshares (CATY), East West Bancorp (EWBC), UCBH Holdings (UCBH), Greater Bay Bancorp (GBBK) and Sky Financial Group (SKYF).

Download Oct 4 ML U.S. Midcap Banks report.

Download Oct 5 ML report on West-Midwest U.S. Banks.

From the table below, you can see that ML estimates the Aggregate Fair Value of CMA at 47 and CBH at 28, while the stocks are presently trading at $56.67 and $37.01, respectively. These are significant valuation differentials, especially if you remove the potential take-over factor.

Also MI is trading today at close to its ML-rated Aggregate Fair Value Estimate, and MI is rated a "Buy", so that gives you some insight into the perspective of ML on these banks.

Comerica D-W-M charts with RSI:

Commerce Bancorp D-W-M charts with RSI:

Caveat emptor. Remember, these are primarily personal and business lending banks; they are not involved in capital markets like the investment banks and broker-dealers, which have been performing well.