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Did Warren Have Help In His Muni Call?

ByDragonfly Capital
AuthorGregory W. Harmon
Published 08/22/2012, 09:47 AM
Updated 05/14/2017, 06:45 AM

So I hear that Warren Buffett took another tubby and decided that Municipal Bonds were no longer a good thing to own. First questions: Was Meredith Whitney in the tub with him? Second: Dude what are you thinking? Giving him the benefit of the doubt and since he is a longer term investor let’s start with a look at the weekly chart to see what is out there.
MUB CHART 1
The Andrew’s Pitchfork shows a break of the Lower Median Line followed by a retest and now a move back lower. Still over the Hagopian trigger line, which would indicate a bear move lower, but with the Relative Strength Index (RSI) bullish and Moving Average Convergence Divergence indicator (MACD) running flat, there is cause for caution but not a time to short yet.

That foxy old man looks prudent on this time frame. But he has a very long view. Maybe we should glance at the monthly chart as well. The rising channel dominates this chart. There are some signs of a topping action with the RSI flattening in technically overbought territory, with declining volume and a MACD that is fading. But the trend remains higher. For a long-term investor like Mr. Buffett you would expect a break of the channel lower before dumping them. Maybe he is just early or maybe he got a tip in the tub.
MUB CHART 2
Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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