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Bombardier requires a little more patience Add to ...

Hi Lou,

I would like your opinion on bbd.b. Is it time to buy?



Hey William,

I have conducted analysis on the shares of Bombardier twice over the last number of years. The first time was on an assignment from Dan on Oct. 16, 2009. The stock was trading at $4.96 and he was sitting on a 41.7 per cent profit. I suggested that he book some of his profits. Within weeks the stock had pulled back to $4.00. The last time I ran the charts was on Dec. 15, 2010 for Brad. BBD.B was trading for $4.65 and at the time it was advised that the stock looked like a short-term buy. The outcome was a run to $7.00.

What you have to appreciate about the shares of BBD.B is that it is a trading stock, not a buy and hold stock. You can trade it for profit but you can’t hold it for profit. A review of the charts will help answer your question if the shares are a buy.

The three-year chart clearly illustrates that you have to pick your entry and exit points when investing in this stock. At this time the shares have made an nice advance off of support at $3.50. There is a double bottom that has formed suggesting that the downtrend that started in July of 2011 has been reversed. What I want to confirm is if there is enough in the tank to take the stock through resistance at $5.00 and the 200-day moving average.

The MACD on the six-month chart has generated good quality buy and sell signals in the past but it is somewhat directionless at this point. The company is scheduled to report fourth-quarter results on March 30, 2012. If BBD.B moves through $5.00 before the release of the results it could run to $6.00 without much trouble. It would be prudent to wait for the breakout before buying.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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