spot check team, page-59

I think today’s fall of 3% is due to the overnight weakness in gold price. Today’s fall is not because of the company. Dissatisfaction with the company has been posted here for months and is well known. A little weakness in the gold price and NCM tanks 3%. Like one poster said, I wonder what percentage fall on NCM we would wake up to if gold fell 3% to 5% overnight?

To estimate NCM share price behaviour in the past 6 months, I have studied the size of falls and bounces on the NCM chart. I used the action around the final GFC plunge and following recovery as my guide to estimate the recent 20.89 low in July and subsequent rally to $29.97 (too bad I didn’t hold all the way up). The final GFC fall was 44% to $16.55. The recovery that followed was 44% to $23.84. The retracement that followed this great rise was 23%, back down to $18.33. Today I want to apply this same 23% retrace to NCM’s $29.97 high. It gives a target of $23.08.

In addition, this year’s spectacular fall which started in late February at $36.10 reached 42% to $20.89, before a recovery of 43% to $29.97 (very similar to GFC price action), was littered with falls ranging between 15.5% and 5%. After these size falls, a bounce ranging in size of between 5-12% always occurred. A common size fall seems to be 11 and 14%. If we apply 11 and 14% to NCM’s last high of $25.97, we get a target of $23.11 and $22.33.

Based on past price behaviour, I believe there will be a bounce of at least 5-8% coming soon once NCM plays with the range $22.33-$23.11 (as it has started to today).

There is also a small chart gap that was created on 26th July as the recent 43% recovery started. This is between $22.25 and $22.37. I wouldn’t be surprised if that gap was also filled during this pre-bounce stage.