The four stocks highlighted today are all trading slightly above their 200-day moving average after making some type of a correction over the past couple of months. I call them late opportunities because they were correcting when the majority of the market leaders were making new highs. This type of action could allow us to label them as laggards but their overall weekly charts would suggest otherwise.

They have all managed to trade above their long term 200-d moving average while showing us a history of success. It may be my belief and your belief that the market is near a top but do we really know when the market will officially top and start to trend lower.

I don’t think so!

So, take the trades since they have ideal risk-to-reward setups. What is the worst that can happen? You sell for a small loss. Big deal because this has been one profitable year so take the trade! These stocks aren’t the market leaders but you may be able to squeeze some profits out of the current moving average setups. We’ll call them lazy summer buys.

AllianceBernstein (AB) was one of the more consistent performing stocks on the MSW Index prior to me shutting down the index in March. The stock was screened heavily last summer and I started coverage on the 29th of July, 2006 at $66.90. The stock gained as much as 40% while on the index but has recently traded slightly downward as it makes a correction towards the 200-d m.a. It tested the line last summer and that is when I saw an ideal buying opportunity so I am now looking for a similar situation. It held the long term moving average as support last week so I would not have a problem taking a position.

(AB) Potential Trade Set-up:
Ideal Entry: $84 to $86 (currently $90.14)
Risk is set at 1.0% maximum of total portfolio or $1,000 of $100k
Stop Loss is 9% or $82.03
Number of Shares: 123
Position Size is $11,112
Risk is $8.11
Target is $108
Risk-to-Reward is 2-to-1

***The ideal entry would be near $84 for a risk to reward of 7-to-1. The stop loss would be 3% or $81.48 with a stop of $2.52.

Rochester Medical (ROCM) has had one heck of a year as it blasted higher from $7.50 to as high as $29 in six months of time. Since the peak, the stock has corrected by 50% over the past two months and is now trading with a suspicious quietness above the 200-d moving average. Is there some type of news that will be released that will propel this stock higher? I don’t know but the trade setup is ideal so take it. Something may be going on behind the scenes so take the nice risk-to-reward setup.

(ROCM) Potential Trade Set-up:
Ideal Entry: $15 (currently $15.14)
Risk is set at 1.0% maximum of total portfolio or $1,000 of $100k
Stop Loss is 5% or $14.25
Number of Shares: 1,333
Position Size is $20,000
Risk is $0.75
Target is $21
Risk-to-Reward is 8-to-1

Click through to see the ideal trade setups for CHINA and GMKT:
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Baidu.com (BIDU) has been a phenomenal holding and one of the strongest leaders among the Chinese stocks. I have watched, researched and jumped on this trend and will remain there until it ends.

New Oriental Education & Technology Group (EDU) has been one of the more consistent Chinese stocks with a great business model and a product in demand.

JA Solar Holdings, Co. (JASO) is fairly new to the blog and my research but has become an instant superstar with fabulous gains over the past three weeks. The stock is now up 51% and I have increased my trailing stop to guarantee a 40% gain (up from a 30% locked-in gain last week).

Mindray Medical International (MR) hasn’t been as successful as EDU but it is showing a 29% gain over the past five months. If I had to cut one Chinese stock from my portfolio, it would be this one as it is the slacker compared to the holdings above.

Be careful with these stocks but don’t ignore a hot trending market. Many thought the Chinese boom was killed months ago but don’t listen to these talking heads. Jump on the trend, ride it, lock in gains or cut losses if you are wrong. You can’t make money if you don’t play the game.

Don’t let your so-called “rational” mindset prevent you from buying a trending stock because it looks too high or seems to be near the end of a trend. Trade your system signals, not your emotions and turn off that TV set and stop reading crappy opinionated stock market blogs. Stick with reading the best blogs that present unbiased data (as unbiased as they can be); the ones that don’t pollute their pages with opinions and garbage beliefs. My blogroll contains some of the best blogs out there for new ideas and research.

You and I don’t know when that trend will end so play the risk-to-reward ratios and you will be fine. If another Chinese JASO comes along next week, I will buy, regardless of the length of the recent boom. Until the leaders fall, I am playing.

Finally, make sure you have hard physical stops (trailing stops) to capture these gains in case a quick pullback or correction does take place.