4 Hot Stocks to Trade (or Not)

Shares popped on the news, rallying up to 11% in the pre-market, but they've been fading over the course of the trading session, only up around 5% as I write. With shares near an important resistance level at $21.50, but well above the equally strong support levels in the mid-teens, I think it's premature to jump into this name just yet. Instead, a bounce at a weaker $19.50 support level would be a more cautious entry opportunity for investors.

Bank of America

Nearest Resistance: $12.25
Nearest Support: $11
Catalyst: Technical Setup

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Bank of America (BAC) is a perennial name on our list of the most active stocks -- but today it's getting a higher showing thanks to the technical setup that's shaping up in shares. BofA has been forming a descending triangle pattern for the past few weeks. What remains to be seen now is whether the ostensibly bearish setup will trigger, pushing shares lower, or if BofA's setup will just end up being a consolidation. A breakdown below support at $11 is the sell signal for this stock.

Relative strength has been stellar for the financial sector over the past several months, and as a whole, most stocks in the sector are still looking strong. That adds some extra evidence that it's not time to panic on Bank of America just yet.

Ford

Nearest Resistance: $14.25
Nearest Support: $11.50
Catalyst: Earnings Call

Things are looking less bullish over at Ford (F). The automaker reported its own fourth quarter numbers yesterday morning, and shares are continuing to sell off today. It doesn't take an expert market technician to see what's going on in shares of Ford. One glance at this stock's chart, and the rounding top in shares looks pretty clear.

As I write, Ford's shares are sitting right below that top, not an auspicious position to be in. That's magnified by the fact that Ford is also so far above its nearest significant support level at $11.50. That means that this stock could have a lot further to fall before buyers start stepping back in. I'd recommend waiting for support to get established before attempting to jump in. If you're looking for an exit strategy in Ford, now's the time to get out.

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