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TheStreet Open House

5 Toxic Tech Stocks to Sell or Avoid

Salesforce.com

Last up on our tour of toxic technology stocks is Salesforce.com (CRM). Salesforce is another name that's provided some pretty impressive gains for investors for most of 2012, but looks a whole lot less attractive in the short-term. While that doesn't mean that you should unload your CRM holdings right away, it may be worth considering for a short trade if the pattern breaks down.

CRM is currently forming a double top, a pattern that's formed by two swing highs that come in at approximately the same level. For Salesforce, that resistance level is right at $160, a price that's been a challenge for the firm for the entire year. Put simply, after a 51% rally in shares this year, sellers are more eager to sell and take gains at $160 than buyers are to keep buying. That sets the stage for a top in the stock.

The sell signal (or the short signal, if you're so inclined) comes on a breakdown below $150 -- that's the support level that separates the two tops in CRM. If you decide to take a short trade here, I'd recommend keeping a tight protective stop; with the broad market finding an important support level of its own, the correlations in the S&P 500 could help awaken buyers in the next few weeks.

Salesforce also shows up on a list of 8 Big Technology Stocks Leading the Market.

To see this week's trades in action, check out the Technical Setups for the Week portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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