During Jim Cramer's Mad Money Lightning Round one caller asked about Berkshire Hathaway Inc. (BRK.B) : "I've been recommending that since the show began," said Cramer. Let's look at the charts and indicators because I am pretty sure Warren Buffett is not a chart reader.
We last looked at the charts in late June and wrote that, "I know that being bearish on Berkshire Hathaway means I will not get invited to speak at the CFA society in NYC, but a trade at $195 could open the way for further declines with $175 as the Point and Figure price target. Past results are...." Let's check out the charts again.
In the daily bar chart of BRK.B, below, we can see that prices have declined since June 24. BRK.B is now below the declining 50-day moving average and the negatively sloped 200-day line.
The On-Balance-Volume (OBV) line has declined so far this month telling us that sellers of BRK.B have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has crossed to a take profits sell signal and could soon cross below the zero line for an outright sell signal.
In the weekly bar chart of BRK.B, below, we can see that prices are now below the declining 40-week moving average line. Trading volume has been shrinking this year and the weekly OBV line has been weak.
The MACD oscillator is pointed down to the zero line and could move below it soon.
In this updated Point and Figure chart of BRK.B, below, we can see that prices are in a down column of "O's" and we still have the $175 price target.
Bottom-line strategy: Having a bearish view on Berkshire Hathaway is probably not popular but that is how the charts and indicators are shaping up. The key level is the late May lows around $197.44 on the Point and Figure chart. A break of this level will give the bears the upper hand.