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5 Toxic Stocks to Sell Now

Reynolds American

2012 had been going well for tobacco giant Reynolds American (RAI - Get Report). At the start of August, shares were up double-digits, and the stock was consolidating sideways, giving investors a chance to take a breather after a quick rally took shares from $38.50 to $46 in a matter of weeks. But the consolidation channel ended up getting broken to the downside, sending a bearish signal for RAI investors.

>>5 Dividend Stocks Ready to Give You a Raise

Since then, shares have found support at $43, but it still makes sense to sell here. There's a lot of downside risk left in Reynolds right now -- even with the firm's hefty 5.4% dividend yield factored in.

For starters, our support level at $43 isn't exactly a strong price level; so far, we've only got one "touch" of that price, versus four reversals at newfound $44.50 resistance. That makes downside price action more likely than upside right now. Volume supports that too.

The stock's biggest volume spike came on a failed test of resistance, indicating that the most participation in RAI came when sellers were smacking this stock lower. I'd recommend waiting for a more meaningful support level before being a buyer. At least you'll get the possibility of an even bigger yield!
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SYM TRADE IT LAST %CHG
A $40.95 0.00%
AZO $700.94 0.00%
INTC $28.95 0.00%
RAI $85.79 0.00%
T $34.74 0.00%

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Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

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