Not all of today's setups are bullish, however.
(BRK.A - Get Report)
is an example of a possible downside trade that could trigger in the new year.
Berkshire is currently forming a double top, a pattern that's formed by two swing highs that top out at approximately the same price level. They're separated by a trough, a level that marks the trigger point for this trade. For Berkshire's class B shares, that level comes in just above $84; if shares slip below that price, then this trade has triggered, and it's time to be a near-term seller (or a short it). RSI adds some extra confidence to the trade -- the momentum gauge made a lower high on Berkshire's second top, an indication that upside momentum is waning.
Take a look at BRK's chart, and you can see that there are some big similarities between it and the SPY chart we looked at first. They both have made a pair of swing highs in the last quarter, and the price action lines up pretty well between the two. That's an example of the high correlations between the S&P and its constituent stocks. SPY, however isn't an ostensibly bearish trade. The fact is that either chart becomes bearish if they break down below their corresponding swing lows from early November. That's a good example of why it's so critical to wait for the breakout to happen before buying or selling.
In the meantime, BRK has some extra bearish indications that make it worth watching as a double top...