BRKB (Berkshire Hathaway Cl. B) offers an objective short entry on this snap-back rally to the 193-201ish resistance zone + 50% Fib retracement of the previous leg down following the recent divergent high & primary (bull market) trendline break/long-term sell signal. As such, the stock will be added as an Active Short Trade around current levels (195.90) with an optimal entry range up to but not much above the 205.50ish level (price resistance + 61.8% Fibonacci retracement level) and down to but not below 183, with stops set accordingly to one’s unique entry price. The price targets for this trade are T1 at 162.85 & T2 at 151.77 with a suggested stop on a weekly close above 211.85. The suggested beta-adjusted position size for this trade is 1.0. Weekly chart below.
BRKB weekly April 9th
Zooming down to the daily time frame, BRKB has rallied back into the significant 196.28 former support, now resistance level as well as the 50% Fibonacci retracement of the previous leg down with a significant additional price, key moving averages, and Fibonacci resistance levels overhead, should the stock manage to build on this recent rally.
BRKB daily April 9th
As with the VZ official short trade posted earlier today, this is a “bear market” trade, meaning that the success of this trade will depend on whether or not my analysis on where the stock market is headed in the coming months proves to be correct or not. As such, make sure to take into consideration regarding any position sizing & overall portfolio allocation to short positions on the stock indexes, sectors with a high correlation to the stock market, as well as individual stocks that are also highly correlated to the stock market.
In other words; short trades such BRKB, VZ, SPY, SSG, etc.. will most likely either all play out to hit their price targets or all (or most) will be stopped out for a loss. A properly diversified portfolio with both long & short positions in various sectors & asset classes (stocks, bonds, commodities, precious metals, etc.) should help to mitigate losses in any one part of that portfolio at any given time but gains from other holdings. (e.g. our GLD long trade is +2.15% which is partially offsetting the -3.84% rally in the LQD short trade today along with other offsetting gains & losses on various active trades).