Short Squeeze a la Buffet ($USG)

• Charles Amadeus
• September 17th, 2009

United States Gypsum, the maker of Sheetrock and other widely used construction materials, rose +25% to close at 19.64. With home builders ($XHB) and real estate ($IYR) leading the market higher, it is no surprise that $USG is performing so well.

Trading in a primary and secondary uptrend above a rising upper Bollinger, $USG formed a breakout on September 11th, and hasn’t looked back since. A move below 17.52 would initiate a secondary downtrend, suggesting further consolidation and profit taking, so place a stop-loss accordingly.

Aside from appearing on my favorite stock scan here, $USG is owned by Warren Buffet via Berkshire Hathaway’s 34% stake. There are plenty of misguided bears on the wrong end of Buffet’s money stick, so don’t be surprised if there the squeeze continues.