Five Star Stock Watch: Facebook, Round Two

For historical reference, check out this post on Facebook from November 18.

Shares have risen nicely lately, but like its counterpart Twitter, it has been rough the past couple of days.

Now the question is: Where might the selling of Facebook stop? 

Related: Five Star Stock Watch: Twitter

The company: Facebook, Inc.

Ticker Symbol: (NASDAQ: FB [FREE Stock Trend Analysis])

Sector: Technology   

Industry: Internet Information Providers

Facebook, Inc. operates as a social networking company worldwide. It builds various tools that enable users to connect, share, discover and communicate with each other on mobile devices and computers. As of December 31, 2012, it had 1.06 billion monthly active users and 618 million daily active users.

Please take a look at the one-year chart of Facebook below with my added notations:

Facebook hit a brick wall back in October at $55 and you can see that the stock stalled there again, briefly, in mid-December. This $55 resistance that the stock created would be the most likely support assuming that the stock's most recent run is not finished.

The volume increase on the break through $55 should add validity to that break. However, should the stock fall back below $55 more selling should ensue.

Related: Five Star Stock Watch: Priceline

Facebook isn't set to release earnings until the end of January 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Don't forget to check out last week's article on Bank of America!