Life isn't just about gossip concerning Tesla, Inc. (TSLA) and Apple Inc. (AAPL) at a trillion. There is plenty of "less sexy" market behavior to be paying attention to right now that should have serious implications for the overall market. While boring to some, we have a huge amount of respect for Berkshire Hathaway Inc. (BRK.B) stock. The breakout we got this week is likely to be the beginning of a 25% move higher, which should take this one close to a $700 billion market cap, and we want to be buying!
First of all, here is the breakout we got this week above the important $200 level. This is not just a psychological, large number reference point, but also the 261.8% extension of the 2015-2016 decline. The next stop is up just under $250. (See also: Berkshire Hathaway Big Winner From Apple Milestone.)
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Taking a step back, here is a longer-term chart showing just how powerful this uptrend has been over time. This breakout above $200 is a big one on both weekly and daily timeframes.
What does this breakout mean for the rest of the market? Well, here is what Berkshire looks like when compared to the S&P 500. They look exactly the same to me.
If prices are above $200, I think we need to be long Berkshire Hathaway shares with a target near $250. Also, remember that this stock trades very closely with the banking sector, probably due to its exposure to banks and insurance. Regardless, this chart looks like a lot of bank stocks in my financials chartbook.
This is an interesting development that I'm not seeing being discussed much these days, which makes me like it even more! (For additional reading, check out: How Warren Buffett Made Berkshire Hathaway.)