Bombardier, Inc.: BBD.B Stock Bulls Need to See This
BBD.B Stock: Bullish Optimism
Bombardier, Inc. (TSE:BBD.B) manufactures products in the transportation space, and their products range from airplanes to subway cars. The company has come a long way since it started out producing snowmobiles, but little can be said about the company’s share price.
Investors are fed up with BBD.B stock, and the biggest problems stem from the company’s pattern of continuously over-promising and under-delivering. This habit has been detrimental to the share performance, as disappointment from shareholders resonates on the company’s stock chart.
The share price of Bombardier stock peaked in 2000 during the dotcom bubble, and the trend has been relentlessly to the downside. Like most things in life, nothing lasts forever, and this downtrend too will end as long as Bombardier survives as a company. The only real question is with regards to timing.
I have personally learned that markets can remain irrational longer than I can remain solvent. As a result, I stay away from trying to catch falling knives, and I prefer investing in companies with constructive price charts.
The Bombardier stock chart has some constructive developments, and the following chart illustrates the big-picture trend in BBD.B stock.
Chart courtesy of StockCharts.com
The downtrend line in the chart above illustrates the predominant trend that began when the share price peaked during the dotcom bubble. The overall picture will become bullish only when the blue trend line is broken to the upside. In order for that event to take place, the pink horizontal line labeled “resistance” needs to be overtaken for the downtrend line to even be tested. Thus far, the horizontal trend line has acted as a formidable level of resistance, and BBD.B stock is having much trouble surpassing this level.
The following chart illustrates the trading action below the horizontal resistance level.
Chart courtesy of StockCharts.com
The price action that dominates this short-term time horizon is bullish on all levels.
In April, Bombardier stock generated a golden cross. A golden cross is a bullish signal that is produced when a faster 50-day moving average (highlighted in blue) crosses above a slower 200-day moving average (highlighted in red). Traders use this signal to confirm that a bull market is on the horizon. It is always wise to trade in the direction of this momentum indicator.
The price pattern is also bullish, as the structure of the current rally is constructive. The rally off the lows has bullish implications, as it is made up of an impulse wave that is followed up by a consolidation wave. A breakout above the descending channel that constitutes the consolidation wave would give way to another impulse wave, which would coincide with a break above the horizontal resistance level.
It is also worthy to note that Bombardier stock is currently testing the 200-day moving average. The 200-day moving average is the dividing line between stocks trading in a bull market versus stocks trading in a bear market. When the share price is above the moving average, it is bullish; when the share price is below the moving average, it is bearish. It is imperative that BBD.B stock continues to trade above this moving average in order for a possible bullish outcome to develop.
The following chart illustrates the near-term bearish developments that must end immediately for the bulls to rejoice.
Chart courtesy of StockCharts.com
The Bombardier stock chart above illustrates the power downtrend that has limited any upside movement in the month of September. In order for BBD.B stock to rally, this trend line needs to be broken to the upside. This feat is the first step that is required for any bullish setup to develop.
Last Words on Bombardier Stock
I am currently neutral on BBD.B stock, and I am waiting to see if the stock can break out of the consolidation wave in a bullish manner. I will refrain from entering a position at this juncture, even though stocks have a tendency to overshoot, and this may mean that Bombardier stock offers tremendous value at these levels. I will leave the bottom-fishing to those who are much smarter and savvier than I am.
