All eyes were on Warren Buffett Wednesday -- the octogenarian billionaire CEO of Berkshire Hathaway (BRK.A) - Get Berkshire Hathaway Inc. Class A Report (BRK.B) - Get Berkshire Hathaway Inc. Class B Report turned 87 on Wednesday, sitting down with CNBC for an in-depth interview that investors have been unpacking for the past day.
But forget about the interview for a second.
Buffett may be grabbing headlines with the insights he shared during the sit-down, but he really puts his money where his mouth is when it comes to Berkshire Hathaway's investment portfolio. And right now, he might as well be shouting that he loves the financial sector.
Financials made up 32.1% of Berkshire's total portfolio holdings in the most recent quarter, the biggest investment in any single sector. Within financials, Berkshire's biggest holdings are banks.
Buffett's favorite investment is only increasing -- news hit earlier in the week that Berkshire was converting warrants into 700 million shares of Bank of America (BAC) - Get Bank of America Corp Report common stock, making Buffett's firm the biggest institutional holder of BofA shares.
The question worth asking now is, which of Buffett's favorite banks look the strongest? To answer that, we're turning to the chart for a technical look at two of Berkshire's biggest banking holdings.
Bank of America
Up first is Berkshire's new position in Bank of America. BofA has managed to move almost 8% higher since the start of 2017, but most of that upside came in the first few weeks of the year. Since then, this stock has mostly tracked sideways. That's not a bad thing, though. BofA's sideways trading is setting the stage for a rally in the second half of the year.
Bank of America is currently forming an ascending triangle setup, a bullish continuation pattern that triggers a buy signal with a material push above $25. That $25 price ceiling has acted like a barrier to upside in BofA all year long, and a breakout through that $25 price point would be a clear indication that buyers are in control of the price action as we head into the fall.
Wells Fargo & Co.
Wells Fargo has long been one of Berkshire's biggest holdings in the financial sector, but it's been under considerable pressure in 2017 thanks to the firm's bogus account scandal. That scandal isn't going away any time soon. The firm raised its estimate Thursday for how many accounts employees created, hiking it to more than 3.5 million.
Likewise, the price action at WFC is under serious pressure. Unlike Bank of America, Wells Fargo is currently forming a descending triangle, the bearish opposite of the pattern BofA is showing investors here. Simply put, if Wells violates support at $51, shares open up a lot of downside in September.
WFC is testing that $51 line in the sand today.
BofA may look bullish right now, but Wells Fargo is a banking giant to avoid for now.
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This article is commentary by an independent contributor. At the time of publication, the author was long BRK.B.