BRK-B enters Death Cross for the first time since October 21, 2019
Berkshire Hathaway Inc. (BRK-B) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
Moving higher for the 3rd day in a row, BRK-B finished Thursday at 183.90 edging higher $3.43 (1.9%), notably underperforming the S&P 500 (6.24%). Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (BRK-B as at Mar 26, 2020):
Thursday's trading range has been $5.30 (2.92%), that's far below the last trading month's daily average range of $9.95. Things look different on the weekly timeframe, where the market's trading range of the last week has been above the market's average weekly trading range. The longer-term, monthly volatility is currently strongly higher than usual for BRK-B.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar.
Prices are trading close to the key technical support level at 175.00 (S1).
While the market is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish. With its 50-day moving average crossing below its 200-day moving average, the stock has entered a so-called "Death Cross" for the first time since October 21, 2019. Showing increasing downward momentum in the short and medium-term the "Death Cross" is known to indicate a potential bear market on the horizon. When the last "Death Cross" happened on September 23, 2019, BRK-B lost -0.75% on the following trading day.
Buying might speed up should prices move above the close-by swing high at 189.07 where further buy stops could get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Death Cross" stand out. Its common bearish interpretation has been confirmed for Berkshire Hathaway. Out of 6 times, BRK-B closed lower 83.33% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 66.67% with an average market move of -1.40%.