NeuLion Inc. off the highs on profit taking

May 13th, 2015 – 1 Comment

The best case scenario for the stock would be some base building ahead of the Q2 results scheduled for release in August.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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NLN LOGO

Today I will examine the case for NeuLion Inc. (NLN TSX) to conclude the assignment from Jim. NLN is a specialist in digital live and video broadcasting, with distribution to a variety of platforms. The company generates revenue from a number of categories  including professional sports, college sports, TV Everywhere, and licensing to consumer electronics companies. On the sports side of the business some of the features provided include, DVR functionality, slow motion viewing, real time highlights, and instant replay.

In January of 2015 NLN closed the acquisition of DivX Corporation for $62.5 million which expanded their portfolio of digital offerings.

An inspection of the charts will help identify the trend, support, and resistance that are in play.

 

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The three-year chart indicates that the uptrend that started in late 2012 has come to an end. The advance that took the shares from trading below $0.20 to a 52-week high of $1.47 in early January of 2015 is now forcing investors to review their investment thesis regarding the stock. The support along the 50 and 200 day moving averages that sustained the move higher for over two years was breached as the shares pulled back to support neat $1.00. The bounce off of support has the shares trading above the moving averages but meeting resistance near $1.17.

 

 

 

 

 

 

 

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The six-month chart highlights the sell signals generated by the MACD and the RSI as the stock pulled back from the 52-week high in January. The momentum indicators also signalled a buy ahead of NLN bouncing off of $1.00 in late March. Currently there is nothing on the charts to support a buy. The best case scenario for the stock would be some base building ahead of the Q2 results scheduled for release in August.

NLN  had been very generous to investors who got on the ride early. No doubt those who were sitting on profits decided to capture some and reduce their exposure to risk in the market. The stock demands surveillance to identify the potential for a new leg up.

Next time I will explore the potential risks and rewards associated with Ceapro Inc. (CZO TSXV) for Jenn.

Make it a profitable day and happy capitalism!

 

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