Tuesday, February 3, 2009

For GT Blog February 2, 2009

The share price of Bombardier Inc. has fallen about 25% over the last 3 trading sessions in response to a few analyst downgrades.

The big concern here is the possibility of a slow down in the Bomber’s aerospace division as competitors like Cessna Aircraft Co, Gulfstream Aerospace Corp. and Hawker Beechcraft Corp warn of plans to cut production due to the economic slowdown.

We a Getting Technical see opportunity here with the shares trading a $3.45 down from a peak of almost $9 a year ago. That is because analysts tend to cut their ratings and price targets closer to the end of a long price decline and then tend to raise their ratings and price targets at the end of a long price advance.

More importantly – according to CIBC World Markets – at this price you get the aerospace division for free!
Now look at the bullish volume during Monday and early Tuesday


Canadian Money said...

I question your buy recommendation.

If one looks at a longer time frame chart - the volume is decreasing on the ~4 month sideways pattern and it seems probable that this issue will break below it's October low. A future price somewhere below $3 seems a very real possibility.

Gettingtechnical.com said...

GT response
Hello Canadian Money
Good observation - there is big support at $3 going back to 2004-2005-2006 - but - the recent selloff has pushed the stock to an inter-day low of $3.23 on Feb 3 on high volume and the rally on increasing volume has me thinking - why wait for another 23 cents?
That is why I jumped in on Feb 3
Bill Carrigan