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5 Toxic Stocks You Need to Sell Now

Southern Corporation

It's a similar situation for electric utility Southern Company (SO - Get Report) right now. The firm has been rallying for much of 2012, but now this stock is looking very toppy. That's thanks to a double top pattern that's forming in shares.

In short, a double top is a bearish pattern that's formed when a stock makes two tops at approximately the same level, in this case at $48. The trough that separates those two tops is the "breakdown level" -- a move below that price signals longs to exit and more risk-hungry investors to go short. SO's setup is basically textbook.

>>5 Stocks Poised for Breakouts

Shares have been consolidating right around their breakdown level for the past few market sessions, as buyers try to bid shares higher. Since SO is printing above $46, it's clear that this stock can still catch a bid, but let's not forget that it's exhausting much of its supply of buyers here at the same time that sellers are more than happy to take gains before SO moves from positive to negative territory for the year.

I'd recommend jumping out of this stock here.

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SO $44.98 0.36%

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