4 Trade Ideas for Berkshire Hathaway: Bonus Idea

• Posted by Greg Harmon
• on December 28th, 2020

Here is your Bonus Idea with links to the full Top Ten:

Berkshire Hathaway, $BRK.B, made a low in March and held there for several months before ramping higher. It peaked in September and pulled back to the 200 day SMA. Since then, it has made a higher high and drifted lower to the 50 day SMA. Now it is rounding back higher. The price action suggests a Deep Crab harmonic, with a Potential Reversal Zone at 277.

The RSI is rising back in the bullish zone with the MACD turning to cross up and remaining positive. There is resistance above at 230 and 234. Support lower comes at 221 and 217 then 212.50 and 209. Short interest is low at 1%. The stock does not pay a dividend. The company is expected to report earnings next on February 22nd.

The January options chain shows biggest open interest at 220 on the put side but large also at 225 and 210 and 205. On the call side it is much bigger and spread from 220 to 250. The February chain is just starting to build and light on the put side. on the call side it has big open interest at 250 and sizeable at 240 as well. The March chain is the first to cover the earnings report. It shows biggest open interest at the 210 put strike and is big at 220 and 190 as well. On the call side open interest is big from 210 to 230.

Berkshire Hathaway, Ticker: $BRK.B

Trade Idea 1: Buy the stock on a move over 228 with a stop at 220.

Trade Idea 2: Buy the stock on a move over 228 and add a February 220/210 Put Spread ($2.70) while selling the March 245 Calls ($2.72).

Trade Idea 3: Buy the February/March 235 Call Calendar ($2.45) and sell the February 210 Puts ($1.70).

Trade Idea 4: Buy the March 210/235/250 Call Spread Risk Reversal for 50 cents.

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with just 4 trading days left in 2020, saw equity markets remaining strong.

Elsewhere look for Gold to continue its short term uptrend while Crude Oil works slowly higher. The US Dollar Index continues to look better to the downside while US Treasuries pullback in their downtrend. The Shanghai Composite looks to consolidate in a broad range over long term support while Emerging Markets trend higher.

The Volatility Index looks to drop slowly making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe, with the IWM and QQQ marching higher and the SPY in consolidation. On the shorter timeframe both the QQQ and SPY are resetting momentum measures with the IWM driving higher. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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