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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

7 Relative Strength Stocks That Should Outperform

Level 3 Communications

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1-Month Relative Strength: 30.65%

Nearest Resistance: $26

Nearest Support: $22

Last up is Level 3 Communications (LVLT), another communications stock that's shown stellar relative strength since the start of the new year; shares have rallied almost 50% since the first trading day of January...

Level 3 is currently forming a long-term rounding bottom pattern in shares, a setup indicates a gradual change in sentiment among market participants. The breakout signal for this pattern is a move above the top of the rounding bottom -- that resistance level to watch is currently $26. On a push above that level, I'd recommend putting a protective stop just under the 200-day moving average; it's the nearest support level that could warn that the momentum is broken in LVLT.

Level 3 shows up on a list of Telecom Stocks Bought and Sold by Hedge Funds.

To see these stocks in action, check out the at Relative Strength Trades 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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