Food for thought: On Thursday, December 30, sugar futures took a long walk on a short pier off a very sharp cliff edge. In case you missed it, the sweet market plunged 10% in its largest intraday percentage decline in more than a decade.
For market participants, there are only two choices when it comes to moves like these: Seeing them BEFORE they arrive -- OR -- doubling one's dose of antacids. In the case of sugar's free fall, you could practically hear the mainstream crowd chewing on their tablets of Tums.
The fact is, in the days leading up to sugar's 10% drop, the mainstream experts identified several reasons why the market's winning streak would continue unabated, including these, below:
- Adverse weather: "Sugar extends rally to 30-year high on speculation that floods will cut output in Australia..." (San Francisco Chronicle)
- Falling supply: "Tight export availability from India...have bolstered prices." (Economic Times)
- High demand: "Sugar futures gain on signs that supplies from Brazil won't be enough to meet demand. Prices may rise as there is no sugar in the market. Who would want to sell now with the fundamentals so bullish?" (Bloomberg)
Well, someone did want to sell -- despite the superfluity of the supposedly bullish factors.
As for seeing sugar's recent slide BEFORE it arrived -- Elliott Wave International's December 29 Daily Futures Junctures observed a topping Elliott wave pattern in sugar charts:
"In sugar, we count five waves up and done at today's high of 34.77. With an impulse wave complete, we can now expect... selling as prices correct the recent run up."
The December 29 Daily Futures Junctures also included a "shocking" big-picture outlook of sugar, suggesting that the recent five-wave rally could be part of "an even larger Elliott wave pattern" dating back to 1999.