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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Toxic Stocks to Sell Now

BCE

Canadian communications firm BCE (BCE) had been looking good for most of 2012. Shares were in an uptrend, and the stock was consolidating sideways as investors weighed their next moves -- that is, until Friday. That's when Canadian regulators blocked the firm's $3 billion CAD takeover of Astral, and shares fell around 3%.

>>5 Rising Dividend Payers for a Bullish but Skittish Stock Market

I realize that a 3% drop doesn't sound like much. But it's where that 3% drop pushed prices that's significant. BCE had been consolidating sideways in a rectangle pattern, a trading range bounded by a horizontal resistance level above shares and a horizontal support level below them. Friday's 3% move sent shares below support, sparking a sell signal for the stock. I wouldn't go looking for a bargain here.

It's useful to think of BCE in real terms. After all, "rectangles" and other geometric shapes don't have some magical powers on a stock chart, they're just easy ways of describing what's going on. Basically, that support level in BCE was a place below which there has historically been a glut of demand for shares -- it's a place where buyers have been more eager to buy shares at a bargain price than sellers were to keep selling. But the breakdown indicates that the demand got sapped after the Astral deal was blocked; with BCE unable to catch a bid, you don't want to be the one who steps in to hold the bag.

Wait for this stock to establish support if you're looking for a buying opportunity. Be warned, it could take a while.

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