Over the weekend Berkshire reported its second-quarter results. Because of the way it must report its holdings (in mark-to-market accounting), the company reported record losses for its investments and derivatives. That said, most of these losses are unrealized.
Instead, investors often look at operating earnings for Berkshire, which came in at $9.28 billion. That’s up significantly from the first quarter’s $7.04 billion and the year-earlier quarter, which was $6.69 billion.
Berkshire ended the latest period with a little over $105 billion in cash and short-term securities. Last quarter, it ended with $106.3 billion after entering 2022 with more than $146 billion.
With its $650 billion market cap, Berkshire is — somewhat quietly — the sixth largest U.S. stock. How it trades is important, and at least on that frontthe stock appears stuck between two key levels.
Let’s look at the charts as Warren Buffett & Co. navigate this bear market.
Trading Berkshire Hathaway After Earnings
The daily chart above -- the Berkshire B shares, which are more accessible to retail investors than the A shares are -- has some two very interesting levels to take note of, starting with $292.
This level was significant resistance throughout 2021 and a major breakout level in December. Ironically while the rest of the market was melting lower, Berkshire stock was exploding higher in the first few months of 2022.
In fact, the shares were actually up 21% at one point in the first quarter as the bulls continued to bid the stock higher.
In any regard, this $292 breakout level was support last week after Berkshire stock pulled back. It also found support at the 10-day moving average.
Now, though, the shares are struggling with the second level of interest: the 10-month moving average.
Notice how the 10-month moving average (noted on the chart with blue arrows) was support in 2021 and the first half of 2022, then was resistance last week.
Struggling to regain this level now, Berkshire stock is stuck between a rock and a hard place, $292 and the 10-month moving average.
The good news? Eventually it will break one way or the other and we’ll have a more definitive feel for the stock’s trajectory.
Put another way, either $292 will fail as support and Berkshire will lose the 10-day moving average or resistance will fail as it powers up through the 10-month moving average and chugs higher.
If it’s the former, the $287 to $288 area could become vital, as it’s where the 21-day and 50-day moving averages are. A break below these measures puts the low $280s in play.
If it’s the latter and Berkshire can clear the 10-month moving average and last week’s high, then the 200-day moving average is in play near $307. Above that and the 50% retracement is on the table near $313.