It's All Fun and Games Until the Market Tests Your Mystique

Warren Buffett finally shed at least some light on the Wells Fargo situation last week, downplaying a report that he wants to transform the WFC Board. Instead, Buffett largely is taking a wait-and-see approach, as share of WFC have lost more than $20 billion in value since the scandal broke. 

WFC is a prominent holding for Buffett's Berkshire Hathaway, and Wells is down more today as it prints multi-year lows. 

At issue for us, as traders, is not an infatuation with Buffett. Instead, we want to infer any potential actionable trades from this scenario. 

As we saw with Bill Ackman, the market can be a cruel monster at times when it smells blood in the water from the ocean's big fish. To be sure, Buffett and Berkshire are nowhere close to being as vulnerable as Ackman may have been, or still may be, in terms of percentage of capital at risk and risk of ruin. 

Nonetheless, the market may still "play back" at Buffett and challenge his mystique a bit as he plows through the twilight of his career. Back in April, we noted that major Berkshire holding KO was likely to pause or come in off the $44 area, prior all-time highs from the end of last century.

Updating the KO monthly chart, below, Coca-Cola still looks vulnerable and can also be deemed a pin action short idea off the WFC/Berkshire mess. Also note on a standalone basis KO is a short idea, given the weakness in the safety sectors of late. 

There are a few other ideas I will highlight for Members in my usual Midday Video.