Some - or dare we say many - investors are enamored with Warren Buffett and his multi-year track record. Here is a guy who comes across more as a plain speaking (and eating) average Joe, and not like a high-powered, impressed-with-himself Wall Street type. He seems like a billionaire whose wealth didn't change him. But despite his enviable track record and down-to-earth, Midwest personality, the shares of Berkshire Hathaway (BRK.B) look toppy to me.
For our look at Berkshire Hathaway, we want to start with this longer-term view, above, and then drill down. Berkshire looks like it peaked in late-2014 around $150. Prices stepped down to $140 and then to $130. The On-Balance-Volume (OBV) line peaked along with the price action. Prices broke below the flattening 40-week moving average, and rallies in mid-2015 stalled at the underside of the 40-week. The Moving Average Convergence Divergence (MACD) oscillator moved below the zero line in 2015 for a sell signal.
This short-term chart, above, of Berkshire shows the decline of the past year. The $135 to $140 area is nearby resistance; dips below $130 have been bought recently. The OBV line has weakened even when prices traded sideways. A bullish divergence between the price action and the momentum study would temper our bearish view, but there isn't one to point to in the bottom panel. Traders should be alert to closes below $130 and $128 despite their personal feelings about the oracle of Omaha.
