AT&T

Last up today is AT&T ( T), the stock that's probably the least toxic of the toxic stocks. Like Reynolds, AT&T is just now coming off the heels of a pretty prodigious rally, up more than 24% since the first trading session in January. But it's the double top currently showing up in this stock's chart that gets my caution flag waving.

>>5 High-Yielding Stocks in a Strong Bull Trend

A double top is a technical pattern that's formed when a stock makes to swing highs that top out at approximately the same price level. While this could just be the start of a consolidation range (a normal occurrence after such a big rally), a breakdown below support at $35 means that it's not. That's your sell signal.

The 50-day moving average has done a good job of acting as a proxy for support since the start of the year. If you want to avoid watching AT&T feverishly, consider setting up a trade alert on a breakdown below the 50-day. That'll give you plenty of time to sell a breakdown below $35 -- and better still, it's a more useful indication of a change of trend is AT&T continues to move higher. Like a trailing stop, the 50-day moves with shares.

For another take on AT&T, it also shows up on a recent list of 5 Bullish Stocks to Buy on the Next Dip. 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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