Aaron
Lynch

With NCP (NewsCorp) showing signs of a bounce the question arises, has NCP turned the corner and what were some early signs to suggest that the tide had turned?

Shares in NCP have come alive on the buzz that Rupert Murdoch will expand his pay TV network further after the purchase of Italian pay TV operator Telepiu. The acquisition of satellite broadcaster DirecTV looks to be on the horizon and may hand Murdoch the international Pay TV network that has long been his ambition.

This has caused some much needed buoyancy in the stock, however the market had already given us some definite signs that there was a possible change in trend in the past few weeks.

Using a swing chart (more easily isolates price movements than a bar chart) we can see that the predominant trend was down with the size of downward moves (circled on the chart) increasing into the March 11 low.

Focusing on the up swings in the opposite direction of the trend, and looking back we can clearly see that the largest swing against the trend was $0.68 in Feb 03 (boxed on the chart). This was followed by an $0.80 swing in the direction of the trend, down. At this point could we say the trend has changed? Certainly not.

So in early March when we see that market changed direction with a swing up of $1.18 nearly twice that of $0.68, this is the time to take notice that a change in trend is maybe at hand. We have witnessed what is referred to as an overbalance in price.

Simply put the market has given us notice that an end to the short term trend has occurred – thus proving that watching the volatility of price on a swing chart can often guide us to early indications that a trend may have changed.

Regards

Aaron Lynch