4 Stocks to Play In Today's Market

Have you ever found yourself trading yesterday's market today? No, I'm not talking about finding a flux capacitor and going back in time. That would make you a day late, and several dollars short. I'm talking about sticking with a great strategy that's been working for a while, but is no longer doing much except slowly bleeding your account of profits made when that strategy was working. I like trending markets. Frankly, I don't know many who don't like trending markets -- other than those hapless few who are always trying to spot the top and get there first. While it's nice to be right, it's painful to be wrong 17x before your 18th this is the top call finally hits the mark. Don't be that guy. Focus on markets, sectors and stocks that are trending. If all three are in sync (market, sector, and stock), you've found nirvana. But honestly, that only happened in the good ole' days. We haven't seen such synchrony in a long time -- save for a week or two after a deep correction. You've got to trade the environment that you find yourself in. These days, the S&P is in a very narrow trading range. It feels heavy, but it also seems to have a bit of helium left in the balloon. Truly a contradiction in market dynamics. Here are four stocks that aren't really trending. So buy high and sell higher isn't going to work very well. But if you can identify support and resistance, and then use those levels to derive risk and exit points, you'll do ok. Bluebird bio has been trading sideways for about 6 months - oscillating between $39 and $52. The tactic that worked during the channeling period was simple -- buy when the stock challenges the prior low, and sell when the stock nears resistance. You wouldn't get $13 on each trade -- but if you could just get half of that range consistently, you could make a career out of trading BLUE. But that pattern has changed. The stock broke out of the channel yesterday on high volume, and is finally up above the 200-day moving average. The company reports earnings next week on Aug. 4. If you're long between now and then, keep your stop just below the channel top. Robert Half International didn't do so well, last quarter. The company reported disappointing earnings and the stock closed down 11%. But don't just reflexively buy the stock because you anticipate a bounce. And certainly don't sell the stock because you're scared it will fall further. Instead, assess the support and resistance lines. Now you can determine your risk vs. reward profile on the trade. First, the June low is down around $34. Yesterday's low was at $35.67 -- substantially higher. So I view yesterday's low as a higher low, and would want to buy the stock here. The stop would be around $35.50. But where's my exit? It would be up around $40. Why not hold it longer? Because we need to respect the pattern and assume that it will remain intact. So you've got about $3.00 of upside, and about $1.36 of risk. Seems a bit tight to me, but if you're trading RHI, that's how I'd recommend trading it. Universal Display Corp has been carving out a right-triangle pattern with a top at $72. Yesterday's breakout occurred on nearly twice the average volume, so you've got to respect the move. The stock has been walking along the 50-day moving average, which is a great reference point for support. I recently covered OLED using a weekly chart to show a multi-year bowl/basing pattern. I think the stock is moving out of that consolidation now, and should continue higher. Earnings are due on Aug. 4. As long as OLED remains above the 50-day moving average, you're good to go. Chipotle Mexican Grill reported earnings last week, and has been moving higher -- recently breaking above the 50-day moving average. The recent pullback has been on declining volume, which is encouraging. From the looks of last week's breakout, I think the low is in on this stock. The company has seen its market cap cut in half since the 2015 high, so I don't believe that the E. coli issue still has more damage to do. On several occasions, CMG has tested $390, and bounced. I'd be a buyer, right now. As long as the stock remains above $400, I think this is an easy one to hold. But if it breaks below $390, then all bets are off. Be careful out there.

4 Stocks to Play In Today's Market

Always trade the environment that you find yourself in.

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