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Key Takeaways
- Berkshire Hathaway shares remain in the spotlight to start the week as the stock has retreated from its record high set earlier this month.
- During the stock’s recent decline, trading volumes have decreased, indicating slowing selling momentum.
- Investors should monitor important lower price levels on the Berkshire Hathaway chart at $446, $421, and $398, while watching the $480 area if the stock resumes its longer-term uptrend.
Shares in Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) will likely remain in the spotlight to start the week as the stock continues to retreat from a record high set earlier this month that saw the conglomerate’s market capitalization briefly surpass $1 trillion for the first time.
Bearish sentiment in recent days could potentially relate to a regulatory filing last Wednesday that revealed Berkshire’s top insurance executive, Ajit Jain, sold more than half his Class A shares in the company. Jain’s insider selling, coupled with the conglomerate slowing its stock repurchases and letting its cash pile swell to $277 billion, has possibly raised valuation concerns among investors.
While the industrial conglomerate’s more-affordable Class B stock was nearly 8% below its Sept. 4 high through Friday’s close, it has still gained around 26% since the start of the year, handily outpacing the S&P 500’s 18% return over the same period. Class B shares were up 0.2% at $448.70 in premarket trading about two hours before Monday’s opening bell.
Below, we’ll take a closer look at what the technicals on Berkshire’s chart are saying and discuss important price levels to watch out for.
Decreased Trading Volume Indicates Slowing Selling Momentum
Since a doji candlestick marked the stock’s record high earlier this month, the price has undergone an orderly retracement.
Importantly, during the decline, trading volumes have decreased, indicating slowing selling momentum.
Lower Price Levels of Interest
Looking ahead, investors should eye three lower price levels on Berkshire’s chart likely to remain in play amid further weakness.
The first sits around $446, an area just below Friday’s closing price where the shares could attract buying interest near the July swing high and a minor pause in the stock’s impulsive move higher between early August and early September.
A failure to hold this level could see the shares decline to the $421 area, a location on the chart where investors may look for buying opportunities near a horizontal line linking the prominent February and April peaks with several trading levels situated in close proximity to last month’s low.
Ongoing selling in Berkshire shares may bring the $398 region into play. This area, which lies slightly below a multi-month uptrend line and the 200-day moving average, would likely encounter support from a trendline connecting a series of price action from early February to early May.
Key Higher Price Level to Monitor
If Berkshire shares find a floor at current levels and resume their longer-term uptrend, investors should monitor the $480 level, an area where investors may look to exit the stock around its record high. Such a move which would complete a basic five phase Elliot Wave pattern.
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As of the date this article was written, the author does not own any of the above securities.