Berkshire Hathaway may soon enter a pullback phase as last week's breakout appears to have failed. The stock remains above near-term support, but cracks are beginning to develop. A close below last week's low would send a clear warning sign that a selloff is likely. For patient bulls, a much lower-risk entry opportunity will be the result.
Early last week shares of (BRK.B) - Get Report reached new all-time highs. This was the third straight higher monthly low after the stock bottomed in mid May. Despite this bullish action, BRK.B has been unable to extend the momentum and is now developing a dangerous top. As this week progresses, investors should keep a close eye on the $176.00 area. A clear break of this area would violate last week's low. A much deeper pullback could follow.
If BRK.B breaks down in the coming weeks, a very low-risk entry opportunity will soon develop. The stock has a solid support zone in place near the $173.00 area. This key zone includes the June and July highs as well as the stock's 50-day moving average. A hold here would allow the stock to recharge for a fresh rally leg. On the downside, a close back below $172.00 would indicate more downside is ahead.
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