The second-quarter earnings season has been rocky. During the past two weeks, almost all the stocks in our Growth Stock Strategist  portfolio reported earnings, and the ensuing changes in stock prices were oddly disconnected from the numbers we analyzed. Although we saw some fabulous performers, marginal earnings misses induced sucker punches while some strong results met with a yawn.

Stocks such as Installed Building Products, with earnings up 52%, beat revenue estimates but missed the high end of those estimates by just 2 cents. The stock price is down about 12% since the earnings date. Ethan Allen, a company that continually delivers solid earnings, beat estimates by 10% yet the stock is up a meager 1% since the announcement. Cray, which missed the current quarter’s estimates and then lowered the third-quarter’s due to delays from big customers, was massacred 30%. Although Cray deserved to be hit, the magnitude of that drop is disproportionate to the news. Even our big winner, Supreme Industries, which beat earnings by 50% and enjoyed an 18% pop in price, has seen that gain wilt.

When I get the fundamental results I’m looking for but not the stock action, I take note. The schizophrenic market behavior of these stocks typically indicates some very nervous investors and possibly market turbulence ahead. I’m not calling for an all-out market collapse or even an extended bear market. However, with many sectors trading at high valuations, a tightening of interest rates on the horizon and a raucous election transpiring, I’m buckling down for some wobbly market action.

To help you weather these choppy waters, I’m putting some restraints on the Growth Stock Strategist by introducing two metrics to the portfolio table: a buy-up-to price and a stop-loss limit for each stock. The buy-up-to price represents the highest recommended price for buying the stock and assumes at least a 25% return.

My target price is a critical piece of this puzzle. Calculating a target price is an imperfect science. While I make every attempt to keep this as formulaic as possible using published earnings estimates, stock prices sometimes dance to another tune. Industry news, investor emotions and simple supply and demand imbalances can drive a stock above or below my targets.

If a stock is above the buy-up-to price, this does not mean it is a sell or that it doesn’t merit a buy rating. This price is merely a guide for the most risk-averse subscriber. Some readers who are willing to push the risk–return boundaries further can certainly do well buying a stock above that level.

The stop-loss limit is a price at which I suggest you sell half your shares. This limit is put in place to control the loss on a trade. Of course, the expectation with each stock recommendation is that the stop-loss will never be needed. Nevertheless, unforeseeable events do occur, sometimes sending a stock much lower than I anticipated. The stop-loss limit assumes a maximum 40% loss but is then calibrated for each stock’s risk. As a result, most stocks in the portfolio have stop-loss limits that keep losses to much less than 40%. I do not recommend keeping stop-loss limits in your portfolio at all times. If there is a whoosh downward because of the market or a company-related event, your limit will likely be hit, even though the stock could easily bounce back up the next day. These are mental limits to use if you are uncomfortable with a loss that is accumulating in a position. If a stock hits the loss limit, I suggest selling half your position and then waiting a week or so to see if the stock rebounds.

In a bull market, the constraints of buy-up-to prices and stop-loss limits often seem unnecessary and can reduce your portfolio returns. When the market is on shaky ground, though, they are welcome supports to lean on. I will update these limits continually to help you hold on to profits while cutting downside risk.

This means that as stocks rise the stock-loss limits will be inched up. As always, I review targets at the end of each reporting season and adjust for changes in estimates.