HERE'S HOW IT'S DONE...
What you need:
An assistant who knows how to trick is done.
Leave the room and have your assistant ask anyone in the audience to point out a secret object in the room. (It can be a picture, a lamp, a table, etc...)  Once this is done have your assistant call for you to come back into the room.  Now have your assistant start pointing to random objects in the room asking, "Is This It?"  Each time you say no.  Wait until she points to something blue.  That is the secret color.  The next object will be the object the audience member selected.  Don't give away the secret and the audience will think you are magic!
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