What’s up with Viterra this week?
Take a look at this five-day chart of its stock price:
That’s a nice little run-up in price. And it’s even more impressive when you look all the way back to the start of this 2010th year of our lord:
It’s been a pretty straight slide down this year for Viterra shares, even before the prairies’ crop production problems occurred or became realized by the market. There’s been little relief from the softening of Viterra, apart from a brief blip or two, all the way down to the seven-buck line. But form most of the last month Viterra has been firming up, steadily rising, and just today (Wednesday morning about 10:00) had jumped two percent.
So what’s up with Viterra? Why this newfound strength? As always, the market only gives us a price, and that leaves us all to chatter about the 10,001 things that could be behind the newfound strength. This baseless chattering is referred to in the markets as “analysis.”
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Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
Perhaps it’s just gotten too cheap and as such a gosh-darned good company its fans are snapping up heavily discounted shares before what they assume will be an inevitable rise back to better levels. Or, on a similarly fundamental level, perhaps investors have received secret information from spies operating inside the Canadian Wheat Board that the agency is going to report a much bigger crop than previously expected when it does its year-end song and dance on Friday and are piling into Viterra shares. (The latter scenario is extremely unlikely and not to be believed, but with all this recent stuff about Russian spies in the U.S., that new Angelina Jolie movie – which is about spies- and the news reports about a sneak in the U.S. military leaking all those classified military documents about Afghanistan, I’ve got espionage on the brain.)
Here’s a more technical explanation that was forwarded to me this morning:
Jul 27, 2010 (SmarTrend(R) News Watch via COMTEX) — SmarTrend has detected shares of Viterra (NASDAQ:VTRAF) have bullishly opened above the pivot of $7.66 today and have reached the first resistance level of $7.69.
We are watching for a cross of the next upside pivot targets of $7.74 and $7.82. Also, the shares are currently trading above the 50-day moving average of $7.23 and should find resistance at the 200-day moving average of $8.86.
SmarTrend, our proprietary pattern recognition system, alerted subscribers to buy shares of Viterra on July 26, 2010 at $7.66. Since the call, the stock has risen 0.8%.
(That’s the end of the news item.)
The difference in share prices between the charts above and this news item comes, I assume, from the different dollar currencies being used to price the NASDAQ-listed Viterra and the Toronto listing of Viterra. And I assume they’re the same company.
Anyhow, that’s a useful technical take on what’s going on. As most of you know, technical analysis is used to catch trends and trend changes in prices before the fundamentals have been figured out. Technical analysis relies on the assumption that all sorts of fundamental changes can be going on beneath the surface of markets before chattering fundamental analysts are struck in the face by them, so if you want to spot trend reversals early, watch the technicals, don’t wait for lagging reports of fundamental shifts.
I don’t know if the news item I popped in up there is right. There are a thousand technical indicators one can look at.
Oddly, yesterday I was looking at Viterra charts and thought I noticed a certain bullish something, at least according to the caveman-level technical indicator I was using. I noticed with my little eyeballs that Viterra shares seem to bounce off the $7 mark. They did that twice in late 2008, as the world was ending, and they just did it a month ago. So I thought: “Hmmm. That’s interesting.”
It’s far from established that this is indeed a turnaround. As you can see from this chart, there have been a number of recoveries before the slide reasserted itself. And this may just be one of those. But $7 could be an important resistance zone, and Viterra may have just bumped off of it.
Personally, I’d like to think there’s a fundamental reason behind this that will help farmers, that there is in fact a bigger crop coming than we have been thinking and that will help grain handlers and marketers. I was speaking to canola watchers last week and they were all upping their canola crop production estimates as the crop shows – once more – its ability to overcome significant challenges. Wheat doesn’t seem like that kind of crop, but Friday we’ll find out how much the wheat board now thinks is out there in farmers’ fields. With luck there’s more wheat out there as well.
