Bombardier Inc. -shares just under $1… good time to buy?
Thanks for the assignment. This will be the seventh time since 2009 that I review the charts for Bombardier (BBD.B TSX). The last analysis was conducted on July 8, 2015 when the shares were trading for $2.28. Alessandro wanted my opinion and the research identified that the shares had been under selling pressure since January of 2015.
The stock broke below the 50 and 200-day moving averages early in the month followed by a death cross that surfaced in February of 2015. What followed was steady resistance along the 50-day moving average which kept buyers in check. It was advised that there was little evidence that BBD.B was about to move higher and that the best approach would be to trade the shares for profit.
In hindsight that was the right call. The stock continued to trade lower but did offer some trading opportunities.
An inspection of the charts will help form my latest opinion on BBD.B
The three-year chart indicates that this stock has generally been a value shredder with some trading opportunities. With the established downtrend and the death cross cited in the previous analysis from July of 2015 the best upside trade came in late August of 2015.
The MACD and the RSI both signalled a buy as the shares were oversold setting up a short but profitable jump to near $2.00. The move didn’t reverse the downtrend but it did provide a trade for those with an appetite for risk. After that BBD.B reverted back to trend touching a 52-week low of $0.87 in January of this year.
The six-month chart pulls into focus the resistance along the 50-day moving average and the breach of support at $1.10. The MACD and the RSI are pointing to an oversold situation that has attracted some buyers but one day of buying is not enough to convince me that we can expect a new up leg in the near future. I would advise caution with this wounded beast.
Next time I will examine the case for Barrick Gold Corp. (ABX TSX) for Jerry.
Make it a profitable day and happy capitalism!