Swing Trading Stocks to Buy Now-MO-ULTA-XL-RAD

The S&P 500 SPDR (SPY) closed at $212.44 on May 15, right in a resistance area going back to February. A continued push higher is bullish for stocks overall, indicating another move higher. In that light, the following four stocks look poised to benefit. All in uptrends and having recently pulled back, these stock are showing renewed strength signaling now may be the time to get involved.

Altria Group Inc.

Altria Group Inc. (MO) pulled back from a high of $56.69 to a March low of $49.03. Since then the price has stabilized, putting in a higher swing low. The price is also poised to break above the April swing high of $52.99, indicating the short-term trend is up (in alignment with the long-term trend). For those looking to get long, one option is buy near $51, although that ship may have sailed. Another option is buy on a break above $53. The first target is $55.25, if looking for a short-term pop higher. A longer term target is between $58.50 and $59.50, based on the trajectory of the trend going back to early 2014.

Ulta Salon, Cosmetics & Fragrance, Inc.

Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) has been trading in a tight range since mid-March. That range is at the top of a trend channel which extends back to mid-2014. That means the price is in a position to pullback further, so the stop loss and risk on this trade should be kept small. If the stock does break this range to the upside though, buying near range support between $148.50 and $150 could produce a nice return. Place a stop loss no lower than $145. If the price holds above the stop loss area, and then moves above the $158.97 high, the target is $165. $168 to $169 is a more aggressive target, based on adding the range height to the breakout price.

XL Group PLC 

XL Group PLC (XL) has pulled back off the March high of $38.26. In May the price found support at $36.35, and has since moved to an 11-day high (as of May 15). With the long-term trend up buyers are stepping in in anticipation that the recent uptick in the price is the start of another wave higher. The ideal entry point is near $37 (requiring a small pullback form the $37.43 May 15 close), as that provides a better reward:risk ratio. A stop loss can be placed below recent support, with a target at $38.25, or $39 for a slightly longer-term trade.

Rite Aid Corporation

Rite Aid Corporation (RAD) has put in steadily rising swing lows going back to October, and the March/April pullback was no exception. The price found support near $7.70, well above the $7.25 support zone from the swing low in March. The break higher from a short-term consolidation in May indicates the bulls could be back in charge. Pick this one up between $8.10 and $8, with a stop loss below the April low of $7.65. Target is $9, or if looking for a slightly longer-term trade, $9.25.

The Bottom Line

Buying during pullbacks has one distinct advantage: relatively conservative targets can be used to produce good reward:risk ratios on the trades. The drawback is that we are buying into recent selling. This why waiting for some indication of renewed strength is wise; these stocks have shown renewed strength. There is no guarantee the short-term strength will translate into another major price wave higher though. This is why stop loss orders are used: to control risk in case the the price doesn't continue higher. As an additional risk management measure, only risk a small percentage of capital on any single trade.