Friday, December 31, 2010

Level 3 Communications - Not for the Faint Hearted

Yesterday while I was browsing through the top volume stocks in NASDAQ market, I happened to see this nicely set up chart which I think is due for a rebound. This stock is none other than Level 3 Communications (LVLT).

 Based on the long term view, the recent down trend line has been broken. It looks like it may head up to the 1st resistance of $1.8 level.

Based on the short term chart, LVLT convincingly broke the down trend line with a bang with very heavy volume and a big gap up. After that, this stock heads a little down for a short term consolidation. Looking at the decreasing volume, it suggest that the selling might be over and the consolidation for the recent upward move appears to be over.

Both the MACD and Stochastic indicate a positive sign for this stock. The MACD histogram appears to be moving towards the middle line into the top. As per the MACD line, the blue line is now touching the red line and it appears that the blue line will go on top anytime.

The stochastic looks strong and it has not yet reach the overbought level which is above the 80% level. It looks like this stock will definetely go up in the next few days.

Based on the technical sides, this stock is definetely a big buy for me.

Lets look at the fundamental side:
The past five quarter earning do not look good at all.
Q3, 2009 = -0.10
Q4, 2009 = -0.11
Q1, 2010 = -0.14
Q2, 2010 = -0.10
Q3, 2010 = -0.10

Going into the future, the estimates earning do not look good as well. Many analysts give a estimate of -0.10 for the coming new few quarters.

Based on this quarterly earning report for the past and the future earnings, I do not intend to go further on my research as I believe this is a waste of time, this stock do not past my 1st criteria as a good fundamental stock.

Therefore, fundamentally this stock is not a buy.

Based on the simple technical and fundamental analysis that I have done above, I would say that this stock is definetely for the daredevil and not the faint hearted. However, if you would like to try, kindly make sure that you put a stop loss whereby if these stock go down to $0.90 from the curent $0.97, you should sell immediately instead of letting the stock goes down further and burn away your hard earned money.

Good luck! and Happy New Year!
Disclaimer : This is not an investment advisory, and should not be used to make investment decisions. Information in The Market Oracle Blog is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The charts provided here are not meant for investment purposes and only serve as technical examples. Don't consider buying or selling any stock without conducting your own due diligence. 

1 comment:

Related Posts Plugin for WordPress, Blogger...