Potential Monthly Wedge Breakout

2019年11月1日

Stock has consolidated for a long time, and on the monthly chart, there is a nice squeeze (see SQZMOM indcator), similar to the ones that formed in 2012 and 2016. The breakouts in 2012 and 2016 led to pretty healthy runs. Looking for something similar here, but I don't expect the rally to last as long as the prior years because the squeeze is shorter (shorter length of consecutive red dots), which typically means less "energy" has been built up for the subsequent move. Ideally one would acquire their positions in the stock DURING the squeeze, not after it has fired (red dots turn green). By the time it fires, the move already began so getting in would mean chasing the stock.

NOTE: Remember this is on a monthly basis so the most recent November candle just started to form, there's some time to get into the trade. Earnings are soon so one would expect daily and weekly fluctuations within the month. If earnings are good, it may be the catalyst needed for BRK.B to push higher and close November above that top red resistance line.

Looking to buy 2021 January $220 calls throughout the month on dips. Will buy 1 contract at a time to average into the full position over time.
Target: $245-$250
Stop loss: $180, or roughly 50% of what I invest in the call options, whichever comes first.