Warren Buffett Moves to CashWarren Buffett Moves to Cash
On August 30, when the price of Berkshire Hathaway's Class B shares (BRK.B) surpassed $465, we noted that:
→ the stock was forming an ascending channel (shown in blue);
→ as the price neared $475, the likelihood of a slowdown in the bullish trend increased.
Since then (indicated by the arrow):
→ the price hit the upper channel boundary,
→ reversed downward after briefly exceeding $475,
→ and dropped to around $455 by November 1, when Warren Buffett’s Berkshire Hathaway reported Q3 earnings.
Analyst forecasts were close to the report’s actual figures:
→ Earnings per share: forecast = $4.9, actual = $4.7.
→ Revenue: forecast = $92.2 billion, actual = $92.9 billion.
→ Berkshire Hathaway’s investment income more than doubled year-over-year, reaching $3.5 billion for the quarter.
Meanwhile, some noteworthy news includes:
→ Berkshire significantly reduced its Apple (AAPL) holdings and refrained from new investments, even as stock indexes hover near historical highs.
→ Cash reserves reached a record $325 billion.
This has led to speculation that Buffett may believe:
→ stock prices are overvalued;
→ a market correction could be imminent.
Interestingly, Berkshire Hathaway is also holding off on buybacks—could Buffett be expecting a further price drop?
Technical analysis of the BRK.B chart suggests:
→ The price has fallen into the lower half of the blue channel, which remains relevant.
→ It’s possible that after a bearish reversal from $475 at the upper channel boundary, the stock has been in a correction phase since September (indicated by red lines), resembling the period from February 26 to July 10.
Traders may want to watch for demand around:
→ $445 (previous resistance in July),
→ the lower boundary of the ascending channel.
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