So far 2010 has been pretty interesting for us – with two new Rhino Stock positions in the last week or so, and some big news for one of them just yesterday, we have a lot to look at today. But first, let’s take a peek at where the market is headed for the next week:

I’ve been hearing a couple of technical analysts talk about a potential breakdown in the stock market – the S&P 500 is forming a bearish rising wedge pattern, and it looks like things are getting oversold, they claim. But I’m far from convinced right now.

Over the course of the past six months or so, the market has been doing some pretty wacky things, but instead of looking at that time period as an aggregate, I think it’s important to think about context, and break it into three distinctive time periods (in the boxes above).

The first period was a cycle of well-defined, exaggerated upward bounds, the second was a consolidation channel that gave bulls a chance to catch their breath, and the third is a correction back to lower ground that we’re nearing the end of right now. Each of those periods had a very unique trading pattern, and each had fundamental swings in investor sentiment that reflected that.

The key level to watch right now is the 50-day moving average, currently around 1114. The 50-day (the thin blue line in the chart above) has acted as support for the S&P before, and I believe it will again in this most recent correction. It’s important to remember, after all, that this is the 11th time that the broad market has pulled back since the summer; but it’s only broken the 50-day line twice. I don’t see any reason to expect a third breach right now.

That said, we’re going to abstain from taking on new positions until we see a bounce off of the 1114 level. The S&P 500 closed at 1116.48 yesterday, which means we’re very close to support – but it’s still a couple points below us, and futures indicate that mixed trading to end the week today could take us there.

Be very conscious of a market close below that thin blue line – it could spell trouble.

Berkshire Makes its 50:1 Split

Yesterday, our shares of Berkshire Hathaway (BRK.B) staged a 50:1 split, bringing our adjusted cost basis to $66.08. That means we’re up around 10% on the stock in a single week as of this writing.

I’ve been fielding a few questions about our Berkshire Hathaway play lately. The idea that Berkshire could rally just because of increased trading and index fund activity has caught the interest of quite a few investors and market commentators. The main stumbling block is the idea that our B shares of Berkshire are locked a fixed price relative to the A shares: How could class B shares move higher if the class A shares stay put?

It all has to do with the way the two share classes are related. To read my whole technical explanation, click here…

Earnings Season Affects Our Stocks

As a reminder, it’s earnings season, that delightful time when a slew of companies report their quarterly numbers to the public. Three of the Rhino Stock Report’s holdings are set to announce earnings in the next couple of weeks: Becton, Dickinson (NYSE:BDX) on January 28, Molson Coors (NYSE:TAP) on February 8, and Computer Sciences Corp (NYSE:CSC) on February 10.

I’ll fill you in on what to expect as we get closer…

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