Alert: Buy Buffett’s Magic Line In The Sand

Investment Alert: Buy Occidental Petroleum (OXY) Under $57

Disclaimer: Investment Alerts have a medium to long-term time horizon. These do not constitute financial advice and you should contact a financial advisor before deciding whether it is appropriate for your individual circumstances.

This might be among the shorter trade alerts of the year but that won’t make it any less valuable if we’re right. You see, we think we’ve uncovered Warren Buffett’s magic line in the sand, the level at which he buys Occidental Petroleum predictably.

This isn’t publicly available information so we can’t know definitively but the price action would suggest that where there is smoke there is fire.

Key Points

• A major “whale” appears to be buying Occidental Petroleum at a specific price point.
• The odds are that whale is Warren Buffett, and his investment team.
• To play Occidental Petroleum, wait for the line in the sand to be reached, and keep a tight stop.

Buffett’s Magic Line In The Sand

Take a look at the chart of Occidental Petroleum below, and you can quickly deduce that the $56 level has acted as staunch support all year. Indeed whenever the share price comes within spitting distance of that threshold, it appears to bounce.

The obvious conclusion is that there is a wall of support that sellers have failed to breach and that’s likely because there’s a huge buyer sitting at that level ready to snap up shares whenever they dip to the mid-$50s.

Who could that be?

Warren Buffett, of course. He’s famously been acquiring a massive stake in Occidental Petroleum. So much so that speculators believed he was planning to acquire the company outright.

In his most recent annual meeting he disavowed those rumors. Nonetheless, his interest in the stock is unequivocal, and it seems that whenever the share price is anywhere close to $56, his investment team may be snapping up shares.

How to Play Buffett’s Line In the Sand?

If indeed, Buffett and his investment team collectively is the big whale buying up all available shares at $56 per share then the play is obvious.

• Wait for a test of the share price in that range, and buy with a stop limit a couple of dollars or so lower, at $54 per share to allow for some daily shenanigans.
• Buying anywhere up to $57 per share has historically been a very fruitful bet.