A weak tech market being led by communications and communications infrastructure isn’t helping a situation already gone bad, but Level 3 Communications (NASDAQ:LVLT) has gone from bad to worse after a dismal 24% drop yesterday on 280 million shares. There were some downgrades today with Credit Suisse cutting targets along with Bear Stearns. But the real issue now is the chart.
This stock has fallen through support levels like a skydiver without a parachute. Before looking at past support levels, it has to be kept in mind that just because they are mentioned does not mean that they have to be tested. Level 3 shares are currently in a bit of a no man’s land as far as recent trading goes. If you go back to 2005 $2.88 to $2.90 are the next support levels ($2.90 was hit today before shares bounced) with $2.75 a bit harder support. After that support isn’t until between $2.50 and $2.60, and then not until $2.30-ish. Unfortunately when charts go this bad, it’s a long haul before things suddenly improve.
This was one of Jim Cramer’s Top 9 Picks for 2007, and was the number 1 pick in the "speculative" category. Shares are down 8% today on more than 110 million shares before Noon at new 52-week lows, although shares have been down over 10% today.
Jon C. Ogg
October 24, 2007
Jon Ogg is the editor of the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.