Berkshire Hathaway Breaks Out Leading U.S. Stocks Higher

JC Parets
August 8, 2018

Life isn't just about Tesla gossip and Apple at a trillion. There is plenty of "less sexy" market behavior to be paying attention to right now that should have serious implications for the overall market. While boring to some, we have a huge amount of respect for Berkshire Hathaway stock. The breakout we got this week is likely to be the beginning of a 25% move higher which should take this one close to a $700B market cap and we want to be buying!

First of all, here is the breakout we got this week above the important 200 level. This is not just a psychological, large number reference point, but also the 261.8% extension of the 2015-2016 decline. The next stop is up just under $250:

Taking a step back, here is a longer-term chart showing just how powerful this uptrend has been over time. This breakout above 200 is a big one on both weekly and daily timeframes:

What does this breakout mean for the rest of the market? Well, here is what Berkshire looks like when compared to the S&P500. They look exactly the same to me:

If we're above 200, I think we need to be long Berkshire Hathaway $BRKB with a target near 250. Also, remember that this stock trades very closely with the banking sector, probably due to its exposure to banks and insurance. Regardless, this chart looks like a lot of bank stocks in my financials chartbook.

This is an interesting development that I'm not seeing being discussed much these days, which makes me like it even more!

JC

 

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