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Californian fine wine – is the long-term bullish trend under threat?

21 February 2024 By Arabella Mileham

There has been an uptick in trade of wines from California over the last few months, however Liv-ex is warning that the long-term bull trend may be under threat.

Analysis from the fine wine marketplace has noted that the California 50 – the 50 most traded wines – has performed well in the last year, remaining flat across the second half of the 2023, compared to other fine wine indices in tracks – and even rising during September and October.

However, in its recent February report, it warned that October 2023 saw a break in the ten-year upward trend of California.

Liv-ex’s new technical analysis tool which was developed to helps predict when a pullback is likely and how volatile prices are at the moment among other things, showed that “the bullish trend is coming under threat of a reversal” and the short-term trend was bearish. “The index has recorded several lower highs and lower lows since its all-time high in September 2022,” it pointed out, “with further downward movement possible”.

One of the analysis measures Liv-ex use, the Relative Strength Index (RSI) shows that while California wine is still not ‘oversold’ (ie trading in the lower section of its recent price range or at a lower fundamental ratio), it is still firmly in bear territory and therefore one to keep an eye on. There was also a shift in another predictive tool that Liv-ex uses, the Simple Moving Average 50 months (SMA50), which calculates the average of a selected range of prices by a determined time period, which gives an indication of whether that price will continue to rise, or reverse. This indicator also fell in January, Liv-ex noted.

However, it’s not all doom and gloom. The last week also saw the release of Screaming Eagle, the US’s most traded US wine producer, which saw significant demand, boosting the USA’s regional trade share in terms of value, to 16.0%. Liv-ex noted that the 2021 vintage topped this week’s list of most active wines. The producer accounted for 28.6% of the trade of US wines during 2023.

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