US LEC

Company. US LEC is a telecommunications company that provides "voice, data and Internet services to business customers throughout the southeastern and mid-Atlantic United States." (company website)

CLEC stock chart
gain Bottom line
28%

Buy. When I bought US LEC in September, it had just made a jump from $4.50 to over $5 and had pulled back a bit.

The signs were right, but as it turned out I bought too soon. After such a big jump, CLEC would go through a consolidation period lasting until mid-November.

In mid-November, CLEC made another jump and consolidated again for a couple of weeks before beginning its current run.

Sell. CLEC was one of the strongest performers in my portfolio right now, and I hated to sell it, but there were some troubling signs:

CLEC order queue Level II quote screen at 11:20ET. Offers to sell are on the right, offers to buy on the left. My offer, which happened to be at the top of the queue, was being handled by the CINNcinatti stock exchange. The little bar chart above shows the number available (in hundreds) at each price point, and the black line is exactly half-way between the highest bid and the lowest sell-offer.
  • After a new high of $6.91 on 9-December, CLEC made three more attempts to break that level but could not; twice it opened at that price then fell during the day to close lower
  • On 16-Dec CLEC traded much, much lower during the day, although it closed just above the opening price, forming a "hanging man" candlestick (as the name implies, this is not a good sign)
  • The ADX line had turned down, and there was a sharp drop in buying pressure (green +DI line) and a sharp rise in selling pressure (red -DI line)
  • Today CLEC opened way down at $6.00 again, just two days after closing the acquisition of FastNet; although it quickly climbed back up, this move was unsettling

Bird-in-the-hand thinkinig took over and I placed my order to sell at yesterday's closing price.

When I placed my order (circled in pink), there were bids at only 15 difference prices, and there was quite a gap between the lowest sell-offer (mine) and the highest bid. Although the market had been open for three hours, only 31,000 shares had changed hands. That picture hardly changed for the next 67 minutes, which is how long it took for my order to execute.

Since my order executed, volume has picked up (82,000 two hours before the market closes) and CLEC shares are now trading at $6.90, up 25¢ since yesterday.

CLEC is up 230% in the last year. I think it's not good to push my luck. If the price breaks through $7 on heavy volume, I may take another position, but a lengthy plateau at the current level would not surprise me.