Monday, July 7, 2014

Are the shorts wrong on Bombardier?

Once again we look for a potential “Short Squeeze” opportunity which is a situation in which a heavily shorted stock or commodity moves sharply higher, forcing more short sellers to close out their short positions and adding to the upward pressure on the stock – etc,,,

At June 30, 2014 I see that Bombardier Inc (BBD.B) was number two on the list of largest short sales at 56,571,356 shares, up 9,284,819 shares from two weeks ago. Once again we need three conditions that could have the shorts change their minds and decide to cover – or buy back in. We need – lots of shorts, strong relative performance vs. a relevant index, and finally the stock must be out-of-favour.

Our chart today is Bombardier Inc. daily plotted above the broader TSX60 index – and as we can see by the lower relative perform lines the relative perform is bottoming vs. the TSX60 Index. Note also the series of higher lows from February to date. The Bomber like the C-Series – could surprise on the upside.

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