Amazon is feeling love this morning from Warren Buffett. Berkshire Hathaway is buying AMZN stock. Buffett says he was an idiot for not buying Amazon throughout the years. Humorously, the Oracle of Omaha, may become the Idiot of Omaha with his latest pick. Buffett has had some poor stock picks in recent years not living up to his reputation as the smartest investor of all time. Perhaps he should have quit while he was ahead.
Buffett followed IBM down the rabbit hole and then exited at a loss. Buffett is enthusiastic about AAPL the last year but it has only chopped sideways. His airline picks are flat to lower. Buffett famously said years ago he would never invest in an airline again. Fast forward a few decades and he is sinking in that quagmire again. He backed the corrupt WFC for many years and still appears to defend the bank. Now that he has capitulated on Amazon and instead proclaims it is the best thing since sliced bread, is he late to the party? Yes.
In fairness, Buffett has a lot to brag about since BRKA and BRKB are at record highs. His ongoing BAC pick is doing well (mostly because of everyone chasing into it because Buffett is in it; the monthly chart, however, hints at a multi-month and multi-year top occurring). It is in recent years that Warren's stock picking skills have waned and now he is hawking airlines and tech companies.
At the September/October stock market top, AMZN was toast as evidenced by the neggie d (red lines), overbot conditions and upper band violation. Keystone highlighted the top in Amazon last Fall as it occurred in real-time. Price collapses with the broad market and then receives the goose this year due to the global central banker collusion.
AMZN came down to the middle band, which is also the 20-month MA, and bounced. There is no reason for Amazon to come up to the record highs again since all the indicators went into negative divergence (there is no more fuel in the tank to take price higher). Amazon has, or is in the process of printing a long-term multi-month and multi-year top. The rally this year is due to the central banker money printing. The world remains awash in liquidity due to the sick central banks. That money flows into stocks and all other asset classes pumping prices higher.
If price comes up and prints a matching and higher record high, which is not expected but may occur now since many money managers kneel and worship at Warren's altar each morning, watch the thin red lines in the right margin. As long as the indicators remain below the thin red lines, the potential price high would come with a double-top formation, or M-Top pattern, with neggie d again and another smackdown like Q4 will follow. Thus, the expectation is for AMZN to roll over again and trend lower and if it does come up over the coming weeks due to the Buffett involvement, it will simply roll over a couple months from now into the long-term weakness.
The ADX has been in a strong uptrend for nine years (purple box). That is remarkable. Keystone has never seen something like that before. Amazon is a special company. CEO Bezos is laughing all the way to the bank. Bezos and Buffett are two billionaire kissing each other's dupa's. Note, however, the ADX peaked last year and is moving down into the 40's. This still represents a strong trend for the upside but if the ADX slips below 30, the strong multi-year upside trend is officially over.
If you are a young person, do not get caught up in the hype nowadays with these high-flying tech stocks or the stock market in general. If you own or plan on buying AMZN stock following the lead of Buffett, you will regret it. If you enjoyed profits all these years, scale yourself out going forward. Keystone does not have any position in AMZN currently but will look for shorting opportunities as the year plays out. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added Saturday, 5/4/19: The Buffett worship takes AMZN up +3.2% to 1962.46 in Friday trading. Enthusiastic investors proclaim that the prior highs above 2000 are on the way now that the oracle lights the way. Instead, looking at the charts, Amazon will likely place a major top anytime over the coming three months. At the end of this year, AAPL and AMZN will likely be lower as well as the other FAANG stocks.
Note Added Sunday, 5/5/19: Buffett defends the decision to buy Amazon stock calling it "value investing." Comically, the oracle invents a new type of value investing where you buy a stock with a PE of 84. Buffett's right-hand man Munger, another fossil, says he is a horse's *ss for not buying Google (Alphabet) stock over the years. Berkshire has an idiot and a horse's *ss leading the company, by their own admission. So Buffett is now all-in with AAPL and AMZN stock and Munger with GOOGL. Buy, buy, buy. That's humorous. Berkshire is now buying back stock something that Buffett did not ever want to do. These two actors are changing their ways as they face mortality now proclaiming high-flying tech stocks as great buys and embracing financial engineering that only serves to make the wealthy class richer. Such is life in the crony capitalism system. GOOGL has potentially placed a double-top, or M-Top on the monthly chart. Buffett and Munger may have top-ticked Apple, Amazon and Google with their happy positive comments. If a multi-month and multi-year downturn begins, their careers will end tarnished. You are only as good as your last trade. Both should have quit years ago when they were ahead in the game.
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