Short Trade Idea
Enter your short position between $479.99 (an intermediate horizontal support level) and $485.67 (an intermediate horizontal resistance level).
Market Index Analysis
- Berkshire Hathaway (BRK.B) is a member of the S&P 100 and the S&P 500 indices.
- Both indices are retreating from their all-time highs with rising bearish catalysts.
- The Bull Bear Power Indicator of the S&P 500 is bearish with a descending trendline.
Market Sentiment Analysis
Equity markets rebounded after a bearish start to the session, as investors welcomed President Trump’s announcement that he will not use force to acquire Greenland. Futures are rising this morning, but are off their highs, and the focus will shift to earnings season, where expectations are sky-high. A recent Bloomberg report noted that beating estimates has the lowest impact on stocks on record. Today’s calendar features releases by Intel, Procter & Gamble, and GE Aerospace.
Berkshire Hathaway Fundamental Analysis
Berkshire Hathaway is a multinational conglomerate holding company that many compare to an investment fund. In the ten years ending in 2023, Berkshire Hathaway produced a compound annual growth rate of 11.8% versus 12.0% for the S&P 500 Index.
So, why am I bearish on BRK.B despite record cash levels?
I am bearish amid its strategic portfolio shift. It is selling its Bank of America stake, reducing its BYD holdings, and relying heavily on US treasuries, while remaining absent from high-growth sectors. While Berkshire Hathaway has excellent name recognition, the leadership change brings plenty of questions and concerns. The return on invested capital (ROIC) is below the cost of capital (WACC), a sign of shareholder value destruction, and suffers from negative price-volume correlation.
Berkshire Hathaway Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 15.48 makes BRK.B an inexpensive stock. By comparison, the P/E ratio for the S&P 500 is 31.05.
The average analyst price target for BRK.B is $528.67. This suggests good upside potential, but downside pressures are rising faster.
Berkshire Hathaway Technical Analysis
Today’s BRK.B Signal
Berkshire Hathaway Price Chart
- The BRK.B D1 chart shows price action inside a bearish price channel.
- It also shows price action between its descending 0.0% and 38.2% Fibonacci Retracement Fan levels.
- The Bull Bear Power Indicator is bearish with a descending trendline.
- The average bearish trading volumes are higher than the average bullish trading volumes.
- BRK.B corrected steeper than the S&P 500, a significant bearish trading signal.
My BRK.B Short Stock Trade
- BRK.B Entry Level: Between $479.99 and $485.67
- BRK.B Take Profit: Between $406.11 and $417.28
- BRK.B Stop Loss: Between $505.89 and $516.85
- Risk/Reward Ratio: 2.85
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