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Friday, November 26, 2010

aerospace boom

The other day Cramer was pushing multiple American manufactures, and he mentioned the concept of an 'Aerospace Boom'. He stated that aerospace booms last for 7 years, and we are on the verge of it.

I found that statement to be interesting. But his voice is only one aspect of the 'chatter', and I needed verification before I can start taking his word seriously. (He provided no numbers to justify the claim.)

This morning I got the verification while combing the web. Both Boeing and Airbus are seeking increase production from their suppliers. Blatantly bullish verification.

Cramer mentioned HON and BA, as the American manufactures to take advantage of the boom. I agree with him as they are really good companies and stocks. However, I find ATI to be the best leveraged to this manufacturing cycle. They took a bit of a hit this quarter due to a miss, but I have been keeping them on my radar for years. (I think they are one of the best, if not the best, in speciality alloys specifically geared to aerospace, oil and defense.)

Technically, they look interesting. The set up is not overly bullish, but does merit a light entry point.

The top end resistance is around 56, while the low end is around 40. But when, I see articles indicating increase in production, I do not expect to see 40 again and expect a new trading dynamic.

At the moment ATI is being supported by the SMAs, and off the top-end resistance, it is enough to merit an initial light entry point. I say light entry because ATI is overbought, and the chart set up indicates a higher probability of it testing between 46-48. Around 46 I will get very bullish, and enter a heavier position.

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