Chart Advisor: Buffett’s Berkshire Buys More OXY

Articles From: Investopedia
Website: Investopedia

By J.C. Parets & All Star Charts

Wednesday, 8th March, 2023

1/ Buffett’s Berkshire Buys More OXY

2/ Tech Shows Leadership

3/ The Short End Rips Higher

4/ Monitoring CAD Weakness

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1/ Buffett Buys More OXY

Warren Buffett‘s Berkshire Hathaway is making headlines again, putting a floor in Occidental Petroleum’s (OXY) stock price at the exact level we’ve seen Berkshire step in many times before.

Below is a daily chart of OXY showing when and where Berkshire Hathaway has increased its holdings of the energy company. It reported its initial position in a Form 4 statement in early March of last year.

Source: All Star Charts, with data provided by Optuma

Fast forward to today, and Berkshire has built a massive interest of roughly 284 million shares, which includes 84 million shares from warrants. This is equivalent to a 30% ownership stake, making Berkshire by far the largest shareholder in the company.

In its first Form 4 filing since September, Berkshire just reported an additional 5.8 million shares of OXY at an average price of $61.10 per share. The transactions were spread out over the last three trading days.

2/ Tech Shows Leadership

The technology sector (XLK) has been among the best-performing sectors on a year-to-date basis.

When we evaluate the relative trend, tech refused to complete a massive topping formation versus the S&P 500 (SPY) when it bounced off the lower bounds of this multi-year trading range in January. Just two months later, it’s making new highs:

Source: All Star Charts, with data provided by Optuma

Fueled by the rally earlier this year, tech stocks have reached their highest level in almost six months relative to the broader market. Despite the recent correction in the stock market, tech stocks continue to show relative strength, falling less than the S&P 500.

We’re watching to see if the XLK/SPY ratio can reclaim its August highs. If it does, XLK could continue to outperform the broad market over longer timeframes.

3/ The Short End Rips Higher

The rising interest rate environment remains intact both in the U.S. and abroad. The short end of the yield curve has had the most upward momentum.

The one-, two-, and three-year Treasury yields are printing fresh multi-year highs, hitting their highest levels since the summer of 2007.

Source: All Star Charts, with data provided by Koyfin

With the short end of the yield curve breaking to new highs together with European sovereign benchmark rates, it could only be a matter of time until longer-duration yields in the U.S. follow.

Under this scenario, the 10-year Treasury yield could rise to 4.50%, with the 30-year yield not far behind.

4/ Monitoring CAD Weakness

The U.S. dollar surged yesterday as global currencies slid to fresh lows. But one chart in particular has our attention: the Canadian dollar (CAD).

CAD dropped more than 1% as it heads back toward its 2022 lows:

Source: All Star Charts, with data provided by Optuma

The decline in the commodity-centric Canadian dollar could have implications for crude oil prices, as “black gold” is one of Canada’s main exports.

A weaker Canadian dollar could foreshadow selling pressure for crude oil.

Originally posted 8th March, 2023

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