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Wyckoff in the news

markdmarkd mod
edited August 21 in Trading Strategies
This story was in the news lately (Nasdaq MarketBeat) :

" The long-running mystery around Warren Buffett’s latest stealth investment is finally over. In Berkshire Hathaway’s (NYSE: BRK.B) newest 13F filing, the Oracle of Omaha revealed a fresh stake in UnitedHealth Group Incorporated (NYSE: UNH). Berkshire ended Q2 holding five million shares, valued at about $1.6 billion, a position it likely began building quietly in the prior quarter after requesting permission from regulators to accumulate shares without triggering a rush of buying....David Tepper picked up 2.27 million shares, while Renaissance Technologies added 1.35 million shares... "

Here's a chart of UNH showing its (simplified) Wyckoff characteristics:





The essence of Wyckoff is that knowledgeable big money accumulates a big stake in a sold out but promising stock without raising the price too much. They first let the stock come to them from discouraged late sellers. Then they begin to actively buy, raising the price as little as possible. If they attract a following, they discourage it by strategically shorting what they have bought until the short term oriented outsiders get discouraged and leave. Once they have their stake, and the followers are gone, they begin the mark up by advertising the stock with a few days of buying, which with no more sellers after the followers are gone, runs up easily. Then the good news comes along ( in this case, its just that Buffet bought) and the stock is on its way.

You don't really need to know all the technical aspects of the Wyckoff method. The essence shows up in the Force indicator moving mostly up faster while price is flat or down more than Force. It works best when price hangs out in a range above its most recent low, while Force rises. Then things go quiet, or the price low gets tested, and then price breaks out.

Not every operation works. Even the smart money can be wrong.

Comments

  • Thanks Mark. Nice chart.
  • lmkwinlmkwin ✭✭
    Dec 2024 UNH CEO assassinated

    March 2025 Court rules that Government failed to prove its $2 billion on Medicare Advantage Overbilling civil case.

    April 2025 UNH cuts earnings forecasts based on unexpected higher medical usage costs.

    May 2025 CEO resigns and UNH withdraws all forecasts. WSJ reports that Government has criminal investigation for Medicare Advantage Overbilling.

    Aug 2025 announces plans to cut several unprofitable UNH Medicare Advantage plans effecting 600k seniors. Berkshire Hathaway discloses $1.6 billion position taken in the second quarter of 2025.




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