SHV Price Weakness, page-2

SHV has been volatile for over a year now. Not just on price, but for 2016 also volume has been high as well.
There have been a few reasons for its price volatility.
- A few years ago it changed its business model away from managing almond plantations to instead owning almond plantations. This required large capital expenditure to acquire plantations, and this expansion found favour in the market.
- At the same time, a prolonged drought in California, the world's largest almond producer saw production fall and prices boom. SHV rode this wave hitting unbelievable highs mid 2015.
- And further, because of that price spike it accidentally rose into the ASX 200 club, thus arousing more interest in the stock giving it a kind of 'stock darling' status. But since no longer in that club as current.

In this enthusiasm the stock was overbought (overpriced) and started to fall in the second half of 2015. To this was added the fall in the almond price. The almond price had gone up too much (to US$4 lb or US$8.80 kg) and was hurting demand and caused a glut. Prices fell and have since returned to about US$2.80 Ib or US$6.17 kg.

As the market always over-reacts in either direction, it oversold SHV. Also in the earlier half of the year the world markets were pretty gloomy in general, and that carried downside momentum. A rebound occurred mid year but has since been sold off. But I can't see a reason for the selloff. Computer trading tends to muddy the waters these days by ignoring fundamentals. And on the technical side of things, based on Fibonacci retracements around $7.50 looks good to me so I'm hanging in there. But it is a volatile stock that was very much a plaything of the stock brokers, and still is to a lesser degree.

Short of some major world catastrophe, other things being equal that;
there is good demand for almonds at AUD$8 kg
and the company's plans stay on track, I think the share price will be a lot higher in 6 months time.