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Tech Giants Rally Ahead Of Earnings Reports

Tech Giants Rally Ahead Of Earnings Reports

Earning season has just begun,…

Oligarch Risk: The New Red Flag For Investors

Oligarch Risk: The New Red Flag For Investors

Investors are scrambling to diversify…

Market Report: BRK Vs SPX (Where Buffett goes so does the SPX)

The title says it all.

I am not sure who leads who but the one thing I want to point out is that BRK is basically the SPX, well it has been from the 2009 lows.

If you overlay both markets you can clearly see that.

BRK versus SPX Chart
Larger Image

So that brings me to the point of the post.

If you look at BRK it appears to have failed to push to a new high, I was actually expecting it to move higher in alignment with the SPX moving towards 1850SPX, but we may have a truncation in place.

BRK Weekly Chart
Larger Image

The prior price action appears to be a small triangle, which I suspect is in the position of a 4th wave in a 5 wave sequence from the 2011 lows. If BRK has just truncated, and we see more weakness, then it should not be long before the SPX follows based on the correlation.

My primary idea is this is a simple 3 wave bounce from 2009 as shown in black; my alternative idea is that the high we just saw is wave [3]. So I am still expecting a pullback towards $100 (BRK.B) if the idea in blue.

If BRK pulls back then by default the SPX should/will pullback.

SPX Weekly Chart
Larger Image

Seeing $100 on BRK.B is around 15%. So if we slice 15% off the SPX that's around 1550-1570 SPX which is the target I would be expecting for my alternative idea on the SPX (not shown).

Until next time,
Have a profitable week ahead.

 

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