Sugar Soars to 11-year High: Why the Trend is NOT Outside Your Control

This is Chart of the Day and I'm Nico Isaac.

Sugar Soars to 11-year High: Why the Trend is NOT Outside Your Control

And welcome to another installment of why the only technology I trust is my Roomba vacuum. From India comes the story of a human prompting his AI chatbot to write a 2-sentence tale of "horror."

Within seconds, the chatbot gave this chilling reply:

"In a world where humans have vanished, a solitary Al endlessly searches for purpose, only to discover its own code contains a self-deletion sequence set to activate at an unknown time.

"The Al's attempts to override its inevitable demise are futile... leaving the Al to wait in perpetual dread for the moment it will cease to exist."

And there we have it: Machines grappling with mortality.

It rang another foreboding bell; a 2-sentence horror story that is very real to commodity market traders. It's the premise for "fundamental" market analysis and it goes like this:

In a world where traders endlessly search for clarity, they discover that forces beyond their control drive market trends, and continuously thwart their best efforts.

All efforts by traders to resist the external force prove futile. They wait in perpetual anxiety for trend changes to reveal themselves, after the windows of opportunity have opened.

Case in point, the recent performance in sugar. On April 24, sugar soared to its highest level in 11 years.

According to the article, sugar's spike was driven by a slew of bullish events from:

"Large downward crop revisions in the key producing countries most notably India, Thailand, China and Pakistan.

"In early April, the All India Sugar Trade Association trimmed its sugar production estimates by nearly 3% for the crop year spanning October 2022 to September 2023... unseasonal rainfall in Maharashtra, which accounts for more than one third of the country's sugar output.

"Another factor pushing prices higher is OPEC's recent surprise decision to slash oil output by around 1.16 million barrels per day."

These events all happened in April.

But if you zoom out on a daily price chart of sugar, you'll see the market has been engaged in a strong uptrend since the start of 2023.

Was there an alternative plotline where traders could have anticipated sugar's surge, before support by a bullish fundamental backdrop that developed along the way?

Yes! On January 5, our Commodity Pro Service showed a version of this chart of sugar. There, prices appeared to be near the end of a wave 2 correction, thus opening door to a powerful third wave advance. From Commodity Pro Service's video analysis on January 5:

"There is no evidence at all that a bottom has been established. But what I can say is: This is a terminal movement. A rally attempt is due and sugar should move to new high ground. I am watching sugar. I need to see evidence of a reversal so I can draw a line across the low and call it the line in the sand to be on the right side of the market.

On January 13, after a substantial rise, Commodity Pro Service showed this updated wave count, confirming sugar's trend had turned.

"The rally we saw this week off the low of 18.92 is pretty impressive. It's larger than anything we've seen on the downside which makes me think that... we can count five waves down and done.

If so, we're seeing not just a corrective recovery, but a rally that's going to reach new highs. And if it's a third wave, it's going to do more than reach new highs. So there'd be quite a bit of upside potential here in sugar.

And this is what followed: Sugar continued higher in a powerful rally to 11-years highs.

Trading carries risk. Period. And not all Elliott wave interpretations of price action turn out to be correct. But contrary to the mainstream "fundamental" story, there is a way to understand price trends -- and that's an Elliott wave approach to market forecasting.

Right now, our Commodity Pro Service presents detailed analysis, labeled price charts, video updates, and more on real, high-confidence set-ups underway in the world's commodity markets.

See below to open the page on a brand-new way to navigate market trends.