3SOF

Quote from: Melf Elf on February 07, 2007, 11:39:39 AM
No, I missed the entry down in the low 6.00s, at the top of the Ascending Triangle, and on those two ascending line validations.

LVLT's reaction to earnings is a good example of why I don't like to chase trades.

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Yeah, technically, it looks very good here, so it could get a nice pop on earnings.  Too much risk for me, though, entering now, at 6.58.

If I had entered long in "No Man's Land," at 6.58, right below the 6.62 target that got MADE, and held it through earnings, I'd be under water on it here. 

That's why entries into stocks are so important.

Let's say that we entered LVLT long in the Symmetrical Triangle (pattern in purple) when it was testing the 6.09 - 6.07 top of the BIG Ascending Triangle (pattern in blue...the long horizontal trendline). 

So, we "theoretically" bought LVLT at 6.09, the higher of the two data points.

When the 6.62 target got MADE, we "took at least 'some' profits when the target got MADE," so we took a profit of 8.7% on part of the position, and we had some cushion heading into earnings.

LVLT got smacked on earnings, as we now know, but the low that day was 6.08, and the close was our 6.09 entry.  We wouldn't have been injured, and would have a break even on the remaining portion of the trade.

That 6.09 close, however, would be problematic for us because it was a violation of the up trendline that had TWO validations (the first two red arrows), which we didn't want to see, but both the low (6.08) and the close (6.09) remained above the top of the BIG Ascending Triangle, so that was mitigating, as far as the trendline break looking so bad, was concerned.

So, where are we now?

Friday, LVLT jumped right back above the broken trendline, which came in at 6.156. The open was 6.20; the low of the session was 6.15!

On Monday, February 13, that trendline comes in at 6.17983.  Friday's close? 6.18.  If LVLT opens UNCH, it will be sitting smack on that trendline.

Quote from: Melf Elf on February 07, 2007, 02:01:42 AM
2. LVLT is Cramer's Speculative Pick of 2007.  It gapped up at 6.18 on January 8, after he picked it, on an Ascending Triangle breakout that put 7.22 IN PLAY, came back an filled the 5.95 gap, then ran higher and MADE the Bullish Falling Wedge target of 6.56.

So, we're sitting at Cramer's 6.18, and 7.22 still is IN PLAY.

Quote
4. Look where the selloff ended, on January 23.  Smack on the ascending line (red arrow).

LVLT sure likes to hit smack on that trendline.  Friday's 6.15 low was the THIRD time.

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5. LVLT recovered to 6.38, went into a little Symmetrical Triangle (pattern in purple) and broke out it on Tuesday.  Look where the 6.05 low of that pattern, at Data Point #4 is: smack on that ascending line, for a second validation (second red arrow).

The close that day was our 6.09, which would have been a nice entry.

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I think that LVLT is trying to say, "What are you, Melf, an idiot?  I've told you twice now.  YES, that trendline is support!   If I tell you that it isn't support, put your stop under there."

Ahem!

I don't think that LVLT should have been calling me an idiot, because it did break that trendline on Thursday, and it also didn't tell me to pay attention to the fact that the top of the Ascending Triangle held as support  on the earnings selloff.

Kinda makes you want to stick your tongue out at this stock, doesn't it?   

What to do...what to do?   

I don't like violations of validated trendlines, plain and simple, and this trendline was validated TWICE (the first two red arrows), and it was violated on a closing basis.

   

But, if it's for a purpose that is understandable, then I try to go along with the program.

Examples:

1. After the "Cramer BOOYAH" gap to 6.18 on January 8, LVLT came back below the Ascending Triangle to fill the 5.95 gap, and it filled it exactly.

That had purpose, and it was understandable, so it was alright.

2. After the selloff from the "Abandoned Twins," LVLT came back below the Ascending Triangle again, but we can see that it did it to validate the up trendline, and it nailed it exactly.

That also had purpose, and it was very nice, technically, so it was alright, as well.

So, now we have to ask ourselves, "Was Thursday's close below that TWICE validated trendline understandable, and acceptable.  Was there a purpose for doing that?"

Well, as I said, LVLT did hold above the top of the Ascending Triangle (6.09 - 6.07), which it hadn't done the last two times that it sold off, so yes, we could understand it if it's trying to tell us,  "Okay, this time the top of the Ascending Triangle is support!"

But, LVLT better not be lying to us!   

The top of the Ascending Triangle comes in on Monday, February 13, at 6.05.  The low of the Symmetrical Triangle (in purple), prior to the breakout, also was 6.05, and it also was our second trendline validation.

So, I think that we could understand it, technically, if LVLT printed a low on Monday of 6.05, or say, within a penny: "I'm nailing the top of the Ascending Triangle at 6.05 to validate it as support, which I haven't done before, and now I'm moving higher."

That would be for a very clear purpose.

Anything below 6.05 becomes difficult to understand.  The 50DMA is at 5.918 at Friday's close, so "maybe" LVLT will go down and tag it, and that will become support, but "maybe" it won't be support.

 

When the analysis is said and done, the bottom line for me ALWAYS is deciding if I think that the trade looks decent enough, and if I do, then structuring the trade in terms of a favorable risk:reward.

What's the risk?

On an entry of 6.18, using a 6.04 stop, it's a loss of 2.3%.

On an entry of 6.18, using a 5.89 stop, giving it a couple of pennies below the 50DMA, it's a loss of 4.7%.

What do we expect on the upside?

Minimum, a return to the 6.80 - 6.78 highs, which "could be" the top of anoher Ascending Triangle, a "fractal" (repeating pattern) of the BIG one (pattern in blue).

From a 6.18 entry, 6.78 would be a gain of 9.7%, so if we use the 5.89 stop, the risk:reward is 4.7% : 9.7%, or 1:2, which is fine.  We always want the reward to be better than the risk.

And, if we take the trade, we always can move the stop up very quickly, once we determine what's going on in the trade, e.g., if 9.05 holds as support, then LVLT moves higher, we can raise the stop to 9.04.

Okay. 

I'll give this one a think over, and see how it looks at the open Monday. 

Amazing analysis Melf Elf,
Holygrale and Quasi was right.
It makes me want to put some money for longer term now too.
I'm still weighing out the pros and cons of holding overnight.
I got burnt on a gap down before.
At that time, GNTA looked fundamentally sound so I bought 1,000 shares at $2.25. It gapped down later on and now I'm still holding it.
GNBT looked nice at the time too, so I bought 1,000 shares at $3.13
with a stop of $3.03.
GNBT gave me a lot of chances to get out that day at a plus after it hit my mental stop - but I didn't get out - I held it overnight!
My plan at the time was: Buy at $3.13, mental stop at $3.03 then buy again at
the $2.00 range with a stop of 0.10 again and 1 more time at the $1.50 range with a stop of 0.10.
Again, I held it overnight!
Now, I'm still holding 1,000 GNBT shares at $3.13.
The 3SOF's program of holding fundamentally sound stocks with risk distributed to 15, looks very interesting.
I'm considering the premium area, but for now I would like to read up as much as I can.
Thanks for your expert analysis,
Ares

Quote from: Eatinfolikefish on February 11, 2007, 09:47:49 AM
GNBT looked nice at the time too, so I bought 1,000 shares at $3.13
with a stop of $3.03.
GNBT gave me a lot of chances to get out that day at a plus after it hit my mental stop - but I didn't get out - I held it overnight!
My plan at the time was: Buy at $3.13, mental stop at $3.03 then buy again at
the $2.00 range with a stop of 0.10 again and 1 more time at the $1.50 range with a stop of 0.10.
Again, I held it overnight!
Now, I'm still holding 1,000 GNBT shares at $3.13.

Ares,

We probably all have done something similar, and it's no fun, is it? 

Interesting that you should mention GNBT.  I happen to have been following GNBT for the past few weeks.  I bought it a couple of weeks ago, sold it for a small loss, but am considering getting back in it this week, at 1.75 - 1.76.

In my opinion, one of the worst things that you can do with a loss like you have in GNBT is to "double down" on a loser: buy another 1,000 at, say 1.75, and "hope" that the market gawds will smile down on you, and that the danged thing will rally to 2.44, which would be your average cost, so that you can get out of it at a break even.

Math:

1,000 shares at 3.13 + 1,000 shares at 1.75 divided by 2 = Avg. cost: 2.44.

That strategy usually gets punished severely, because the stock already hasn't been acting properly since your entry, or you wouldn't have the kind of loss that you have.   The bearish trend often continues, and the "Doubling Down" strategy only makes matters worse when we throw good money after bad.

That said, if we can support "Doubling Down," technically, in other words if we can come up with a very sound reason for doing it, that strategy can work, but there's additional risk involved, naturally, so we have to be VERY disciplined, and stop out the "Double Down" trade immediately, if it isn't working.

I'll post the specifics of that strategy for you in the GNBT folder on the Previous Picks Board, if you're interested.

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The 3SOF's program of holding fundamentally sound stocks with risk distributed to 15, looks very interesting.
I'm considering the premium area, but for now I would like to read up as much as I can.

I believe that David has a two week free trial.  You might check that out.

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Thanks for your expert analysis

You're welcome, Ares.  I slug it out, same as the rest of you.  I'm glad if it was helpful.

Thanks for your reply Melf Elf,
Just to clarify though, I was not planning to double down on GNBT.
The plan was to Buy at $3.13 and respect the 10 cents stop loss at $3.03 then when it reaches the $2 range and shows some strength to take a long position again with a stop loss of another 10 cents.
The idea was to start with $3.13 x 1,000 shares
risk: $100/$250
Buy at a cheaper price with same 1,000 shares
risk: $100/$250
If I followed that plan, I could have achieved that goal.
The main problem was, I did not stick to the plan.
I Daytraded GNBT when it was about 0.80 cents on the way up to about $5.
Another mistake that I did was, I got attached to GNBT (with it's potential to provide vaccines to fight the Avian Flu).
Looking forward for more comments from you.

Thanks again,
Ares

Quote from: Melf Elf on February 11, 2007, 04:37:39 AM
The top of the Ascending Triangle comes in on Monday, February 13, at 6.05.  The low of the Symmetrical Triangle (in purple), prior to the breakout, also was 6.05, and it also was our second trendline validation.

So, I think that we could understand it, technically, if LVLT printed a low on Monday of 6.05, or say, within a penny: "I'm nailing the top of the Ascending Triangle at 6.05 to validate it as support, which I haven't done before, and now I'm moving higher."

That would be for a very clear purpose.

Anything below 6.05 becomes difficult to understand.  The 50DMA is at 5.918 at Friday's close, so "maybe" LVLT will go down and tag it, and that will become support, but "maybe" it won't be support.

Bought LVLT at 6.04.  Stop: 5.79.  Risk: a loss of 4.1%

I sure would have liked to have seen 6.05 hold as the low of the day, but the 6.03 low could be a little fakeout, so I'll go ahead and give it a chance, even to go down to the 50DMA, or to test the January 23 low of 5.82, thus my 5.79 stop.

Holding long anything below that is tough for me to justify.  I'd like to see a 6.05 close today, or better.

Quote from: Melf Elf on February 12, 2007, 02:58:12 PM
I'd like to see a 6.05 close today, or better.

The close was 6.04.   

Deutche Bank downgraded LVLT to sell on January 17, which was the morning that the stock gapped down and left the "Abandoned Twins" on the chart.

This morning, Deutsche Bank has upgraded LVLT to hold.   

Level 3 Communications upgraded to hold at Deutsche Bank
By Simon Kennedy
Last Update: 5:37 AM ET Feb 13, 2007

LONDON (MarketWatch) -- Deutsche Bank upgraded Level 3 Communications Inc
to hold from sell, citing an increasing likelihood that the firm will meet near-term expectations. "With the acquisition of three well positioned competitive local exchange carriers in addition to eliminating other excess capacity in the market with the acquisitions of Genuity, Wiltel and Broadwing, we cannot dismiss the idea that the operating environment for Level 3 may finally begin to improve after several long years of lagging industry and overall market performance," Deutsche Bank said.

Quote from: Melf Elf on February 12, 2007, 02:58:12 PM
Bought LVLT at 6.04.  Stop: 5.79.  Risk: a loss of 4.1%

Sold 20% of my LVLT at 6.19.  Gain: 2.4%.

Raising the stop of the remaining 80% to 6.01, below the past two days' 6.02 low.  Excluding a gap down below 6.02, that will lock in a fractional gain on the trade.

I'm not real fond the "Gaps To Crap," then fade, that we've been seeing. 

Quote from: Melf Elf on February 14, 2007, 09:47:35 AM
Bought LVLT at 6.04.  Stop: 5.79.  Risk: a loss of 4.1%

Sold 20% of my LVLT at 6.19.  Gain: 2.4%.
[/quote]

Sold another 20% at 6.54, at February 7 gap resistance.  Gain: 8.3%

Quote
Raising the stop of the remaining 80% to 6.01, below the past two days' 6.02 low.  Excluding a gap down below 6.02, that will lock in a fractional gain on the trade.

Stop on the remaining 60% long position still is 6.01.

In LVLT at: $6.70
Watching 6.78 and 6.80 as light resistances
Just catching a ride with that buyer.
The nice thing with smaller positions is you could get in and out faster that those institutions without affecting the price a lot.
Nice market making skills.
This is what happens when it hasn't reached 25 cents above or below the open - not much movement.
I got concerned when I saw the counter block trade.
Got out at 6.73
At the minute chart, there was a huge volume that created a doji inside the bollinger band.
It was followed by a red candle - touching the lower Bollinger Band.

The top of the Symmetrical Triangle (pattern in green) came in yesterday at 6.766.  The high was 6.77.  The close was 6.76, a penny above last week's high of 6.75, so it's champing at the bit for a breakout, which would put 7.71 IN PLAY.

Math:

6.80 - High of the pattern (Green #1)

5.85 - Low of the pattern (Green #2)

6.80 - 5.85 = 0.95 points + breakout above 6.76 = Target: 7.71.

7.22 still is IN PLAY from the January 8, 2007 Ascending Triangle breakout (pattern in blue).

Quote from: Melf Elf on February 20, 2007, 10:12:06 AM
Bought LVLT at 6.04.  Stop: 5.79.  Risk: a loss of 4.1%

Sold 20% of my LVLT at 6.19.  Gain: 2.4%.

Sold another 20% at 6.54, at February 7 gap resistance.  Gain: 8.3%

Stop on the remaining 60% long position still is 6.01.

I'm raising my stop to 6.39. 

Quote from: Melf Elf on February 20, 2007, 10:12:06 AM
Bought LVLT at 6.04.  Stop: 5.79.  Risk: a loss of 4.1%

Sold 20% of my LVLT at 6.19.  Gain: 2.4%.

Sold another 20% at 6.54, at February 7 gap resistance.  Gain: 8.3%

Stop on the remaining 60% long position still is 6.01.

I'm raising my stop to 6.39. 
[/quote]

Stopped out of my remaining 60% of LVLT.  Gain: 5.8%.

Seeking Alpha
Level 3 Communications: Ready to Rule the CDN Market?
Wednesday June 13, 5:35 am ET


Dan Rayburn submits: The market has not heard much from Level 3 Communications (NasdaqGS: LVLT - News) as to where they stand regarding their video content delivery offering since their acquisition of the SAVVIS CDN assets about five months ago.


Recently, however, I got an opportunity to meet with Level 3 at length and heard an overview of their content delivery product offering plans. As anyone who follows this industry knows, it's a good time to get into the content delivery market due to the high demand for delivery services and the fact that there are only about half a dozen providers or less who truly provide global delivery via streaming and progressive download.

After hearing Level 3 give their take on the what they want to accomplish, I found the company an interesting one to watch for a few reasons; they should have a few unique advantages when they bring their product to market:


They own and operate their own network and data centers. I know this model well from my days at Globix, when we owned and operated our own network and data centers and used to tell customers that "we can control your content from creation to distribution". It's a different value proposition that resonated well with our customers at the time and I expect it sttill does with many content creators today.
They own the Vyvx business which allows them to be able to ingest content directly into the Level 3 network. Add a few encoding studios, and customers have the ability to ingest, encode, host and deliver their content through one provider. That's something that no other delivery network has the ability to offer today.
They have contracts with many of the big media companies already for other services like data and networking, which gives them an immediate sales pipeline for a content delivery offering or any new product for that matter. In addition, they can provide customers with the build out of smaller networks for some of the content creators who are building out their own private delivery networks. That's not to say they can do all of this tomorrow or that they will automatically be successful, but I think they have a good shot at being a serious player in the industry if they put the right pieces in place and move fast enough. They are going to have to roll out the functionality of the network in phases and have in fact already announced the first round of the build out in May.
When it comes to the CDN business and assets that they bought from SAVVIS, the only real value there was the assets for the delivery of static content, not video. Anyone who knew the SAVVIS streaming network knows how old and outdated it was, since it was mostly the legacy infrastructure from the Cable & Wireless days. So Level 3 has a lot of work to do, basically building out a new CDN for streaming, as well as adding all of the services that go along with it, like reporting, storage, content ingestion etc.... not to mention all of the internal work that needs to be done to sell and support such a service. But done correctly, with all of the right pieces, it will be a valuable offering in the market.

While it won't put the other content delivery networks out of business (there is enough business out there for everyone) they do have the opportunity to be a serious player in the game with an offering that talks to more than just the delivery of bits. For the most part, it's a different kind of offering where they can sell the service to fulfill more of an entire ecosystem need to content creators, as opposed to just selling the delivery aspect. This is a trend we are seeing all of the CDNs move to as they begin to add more services to their offering like content management and transcoding.

In my opinion, the biggest competitor to Level 3 will be themselves. Many big companies never really get a product off the ground to mass market adoption because they move too slowly, have to0 much internal politics and red tape and take too long to decide on anything. For the most part, the smaller content delivery networks have been able to grab market share by staying quick and nimble. If Level 3 can combine the advantages of being a big company with the ability to move fast like a small company, then this can be the real deal. We'll be watching.

Press Release Source: Level 3 Communications


Level 3 Completes Internet2 Optical Network Implementation
Wednesday June 20, 7:00 am ET 
New Nationwide Network Delivers 100 Gigabits per Second with Ability to Expand


BROOMFIELD, Colo., June 20 /PRNewswire-FirstCall/ -- Level 3 Communications' Business Markets Group today announced that the Internet2 nationwide, dedicated network services backbone is operational. This new 100 Gigabits per second (Gbps) network delivers an immediate increase in bandwidth and the capability for future scalability to enable emerging applications for the Internet2 research and education community. The network delivers the underlying optical technology required for Internet2 to dynamically provision multiple 10 Gbps wavelengths. This milestone enables Internet2 to remain on schedule to complete member migration from the existing network to this new backbone by later this year.


(Logo: http://www.newscom.com/cgi-bin/prnh/19990721/LVLTLOGO)

"With more than 10 times the capacity of the current Internet2 backbone network, this powerful new network unlocks significant technology possibilities for our members," said Doug Van Houweling, Internet2 president and chief executive officer. "Level 3's innovative and collaborative spirit has helped keep this large and complex network project on track, even delivering the network ahead of schedule. With this latest major milestone in our network deployment, Internet2 will continue to focus our efforts on providing a smooth and seamless transition from the current network onto the new platform."

The new Internet2 network is designed to provide point-to-point dedicated circuits and IP services that can support next-generation applications in critical fields like telemedicine, radio astronomy, distance-learning and energy sciences research. The network will also serve as a platform for network researchers to develop new networking ideas and protocols. Created to enable a wide variety of bandwidth-intensive applications currently in use and under development at campuses and research labs, the network is designed to support growth and changes in Internet2 member requirements over time.

Under the terms of the multi-year agreement announced in June of 2006, Level 3 is providing dedicated backbone facilities comprising 13,500 long-haul route miles, multiple customer colocation suites and newly deployed metro fiber. Under the agreement, Level 3 is also providing wavelength and high-speed IP services to Internet2 with options for private line, metro and long-haul dark fiber services to interconnect the backbone with academic institutions.

"We are very pleased to have completed the delivery of a network of this scale for Internet2," said Randy Dunbar, senior vice president of offer management for Level 3's Business Markets Group. "We are proud to be an Internet2 business partner and to be providing a network that delivers increased bandwidth and scalability, enabling research and education communities to capitalize on technology innovations."

About Level 3 Communications

Level 3 Communications, Inc. (Nasdaq: LVLT - News), an international communications company, operates one of the largest Internet backbones in the world. Through its customers, Level 3 is the primary provider of Internet connectivity for millions of broadband subscribers. The company provides a comprehensive suite of services over its broadband fiber optic network including Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice services and voice over IP services. These services provide building blocks that enable Level 3's customers to meet their growing demands for advanced communications solutions. The company's Web address is http://www.level3.com.

"Level 3 Communications," "Level 3" and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Any other product, service and company names herein may be trademarks or service marks of their respective owners. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc.

Forward-Looking Statement

Some of the statements made in this press release may be forward-looking in nature. These forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside Level 3's control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent Level 3 from achieving the stated goals include, but are not limited to the company's ability to: successfully integrate acquisitions; increase the volume of traffic on the network; defend intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of debt obligations. Additional information concerning these and other important factors can be found within Level 3's filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors.

--------------------------------------------------------------------------------
Source: Level 3 Communications

Finally is starting to make some positive moves.......


52wk Range: 3.37 - 6.80
Volume: 49,648,205
Avg Vol (3m): 29,395,000

Technicals
Close Above the 13-day MA
Most Actives
Percentage Gainer

Last Price Quote is:
5.91%above 13-day MA
3.55%above 50-day MA
RS Rating: 24 

Fundamentals
Key Data:
Market Cap (M): $8,337.95 
P/E Ratio: NA 
PEG Ratio: -1.1625 
Next Earnings: 07/24/2007
Last Analyst Rating: Hold

Check out these buys by insiders on Oct 31st and Nov 1st
1-Nov-07 EBY DOUGLAS C
Director 1,005,000 Indirect Purchase at $2.99 - $3.01 per share. $3,015,0002
31-Oct-07 MAHONEY MICHAEL J
Director 30,000 Direct Purchase at $3.09 per share. $92,700