Sugar #11 (ice) - Daily Log Scale

Sugar #11 (ICE) - Daily Log Scale

-C(V)

From Elliott Wave Principle: “A (horizontal) triangle is delineated by connecting the termination points of waves A and C, and B and D. Wave E can undershoot or overshoot the A-C line, and in fact, our experience tells us that it happens more often than not.”

“b”

( III )

c

“5”

“d” b d

“3”

a

“4”

b

“a”

21.18

“c”

a

21.78

c

e?

“e” ( IV )

“1”

“2”

(I)

( II )

alt:-B-

-B-

Last week’s update focused on 21.78 as being key support. This was too ‘short sighted.’ One of the rules of “horizontal contracting” triangles is that the e-wave cannot be larger than the d-wave. Because I was counting out the final “e” wave here as a triangle within a triangle, 21.78 was an important level, because a break of 21.78 would have made the proposed e-wave too large. My mistake was not giving consideration to the larger triangle that was also in place. For the larger triangle, the 21.18 level was the support point that would keep the higher degree “e”-wave smaller than “d.” In the very strange market conditions of early Friday morning, that level held and ended up producing a very bullish candlestick. The final “e” looks like one of those instances where it “overshot” the “a”-”c” trend line. I have found it to be much more common for the “e” to “undershoot” rather than “overshoot.” This looks like a triangle that has concluded.

Andy’s Technical Commentary__________________________________________________________________________________________________

Sugar #11 (ICE) - Daily Line on Close Log Scale

-C(V)

From Elliott Wave Principle: “A (horizontal) triangle is delineated by connecting the termination points of waves A and C, and B and D. Wave E can undershoot or overshoot the A-C line, and in fact, our experience tells us that it happens more often than not.”

“b”

( III )

c

“5”

“d” b

“3”

d

a

a

“4”

b

“a”

21.18

“c”

c

e?

“e” ( IV )

“1”

“2”

(I)

( II )

alt:-B-

So what was the pattern of the last several weeks? According to the ‘rules’ of Wave Analysis, the “e” wave could not have been a triangle on the previous page because of it’s size relative to the “d.” This is where it gets ‘tricky’ sometimes and an analyst has to use some judgment. Look at this chart. It’s the same market, but this is the daily “line on close.” Notice how much different it looks. With this view, it looks like a very nice example of a triangle “e” within a larger degree triangle Wave (IV). The line on close eliminates the noise of the wild overnight session from Friday. It’s probably worth noting that Sugar spent less than 30 minutes below that 21.78 level and that was the first 30 minutes it was open at 3:30 AM.

-BAndy’s Technical Commentary__________________________________________________________________________________________________

-C-

Sugar #11 (ICE) - Daily with Line on Mid-point

(V)

“b”

( III ) “5”

“d”

b d

a

c

e

“e” ( IV )

“c” “a”

According to Mastering Elliott Wave (Neely), this is the proper way to draw a cash chart. The line should be drawn through the “midpoint” of the day’s range. For me, this method is too tedious for intraday trading and the charts “usually” don’t look much different anyway. However, drawing the chart in this manner confirms the view from the previous page.

Andy’s Technical Commentary__________________________________________________________________________________________________

Sugar #11 (ICE) - Daily Candlesticks Sugar has put up a very impressive candlestick. It looks a lot like a classic ‘double bottom’ with a candle that engulfed the previous four days of trading. If you sold Sugar at any time in the last five days, you are now facing losses.

As impressive as this daily candle was, though, bulls will need to ‘slice’ through the various downtrend lines that are in place to prove that a ‘thrust’ is indeed underway.

Andy’s Technical Commentary__________________________________________________________________________________________________

Sugar #11 (ICE) - 1597 “Share-Weighted” Chart This is a “share-weighted” chart that helps smooth out the effects of the lower volume early morning trading. This is the action up from the 21.33 lows on Friday morning. There is no evidence of a “five wave” move up yet. This should become a “five” if we’re seeing a final Wave (V) higher. -5-

-3(5) (3)?

(4)

(1) (b)

-422.32

-122.09

(2)

(a)

(c) -2-

This would represent an idealized “five wave” higher from the 21.33. Bulls need to set new highs before any serious pullbacks here. It looks like 22.32 should be considered support for new longs. Any kind of sharp pullback below 22.32 without first setting new highs would negate the idea that a “thrust” is underway. There should be no “meandering” around during a “thrust”--it should be a powerful move higher.

21.33

( IV )

Andy’s Technical Commentary__________________________________________________________________________________________________

Sugar #11 (ICE) - March ’10 vs. Oct ’10 Spread Here we can see observe the March/Oct 2010 “spread” on Sugar. We can see the market remains in “backwardation,” indicative of a “tight” market in March. The “flag” pattern here is a classic formation indicative of a market that is merely “pausing” before taking another leg higher. Perhaps the best way to trade this Sugar market is to “bull spread” the Mar/Oct spread: buy March and Sell Oct at the same time. If Sugar does “explode” higher, then this spread may actually perform nearly as well as the “flat price” March outright. This spread may act like a “call option.”

Support here

2.25

Andy’s Technical Commentary__________________________________________________________________________________________________

Sugar #11 (ICE) - Timing the End of the Move It has been mentioned before the tendency of “thrust” moves out of triangles to conclude at the apex of the triangle from where the “thrust” began. Here we have two triangles in place that should be considered. Based on this concept, and using the line on close chart, it looks like early to mid-January might conclude the move. If the final Wave (V) can hit the top of the Elliott Wave channel, it would target a conclusion around 28.00.

( III )

( IV ) Elliott Wave Channel

(I)

( II )

Andy’s Technical Commentary__________________________________________________________________________________________________

Sugar #11 (ICE) - Daily “Bearish Case?”

-C( III ) “5”

(V) 25.37

“b” c

a

24.85

“3”

“4”

( IV )

“a”

b

21.18

“1”

“2”

(I)

( II )

I’m not sure what the bearish count might be given the recent price action. It’s not my preferred count. The 21.18 level now looks the important support level. Bears need to take this level out to gain any sort of traction lower. This just doesn’t look like a market that has formed an important top. Taking out 24.85 should kill any bearish hopes that this move has completed.

-BAndy’s Technical Commentary__________________________________________________________________________________________________

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