Do I need new rear shocks?

[Mark M]

1990 300te
120,000 miles

Took it out today and I immediately noticed a bouncy-ness from the rear end with every little bump in the road. Stopped by Home Depot to pick up 3 large bags of topsoil and by the time I got home, the rear end on the driver's side was all the way down. Tried to bounce it by pushing down on the car, but it was bottomed out. Visual inspection and I don't see any fluid on the hydroponic shock and springs looked OK. Car has 120k miles and shocks are original. Accumulators were replaced about 3 months ago and leveling system was working fine up till today.

Do the shocks on this car help support the weight of the car at rest, or does the car sit only on the springs?

Do I need new shocks or should I be looking at somethings else? (I would hate to spend $800+ to find out that I should have replaced something else first).