Despite the recent fall Sugar and Coffee are still in news. The preferred view might look like an extending 3 cycle wave up. However, it makes sense to see what is not obvious from a rising asset price structure. This is the most common mistake Elliotticians make, not thinking of how the asset can surprise or in other words a backup alternate count. We have made a case for an alternate super cycle reversal here for sugar.

We will start with a multi month case before we move to the large Sugar bust. From March 1999, the move up is converging. The formations from 99 lows lack a classic 3 cycle wave up look. Sugar boom and busts move counter cyclically to markets. Positive equity market can see an under-performance in sugar and vice versa. So expecting a multiyear bust on sugar is somewhere giving weight to the case of a secular bull market. Sugar consumption is generally less (negative correlation, coca cola zero, Socionomics) in bull markets.

Even the Rieki performance cycle on Sugar is down and suggesting negativity for multi months, which again works against the strength of the preferred 3 cycle up. The Alternate Elliott structure is a completing 5 of C of (Y) multiyear corrective. The quality of retracement (potentially till Aug 09) lows would suggest where Sugar is headed and whether this alternate scenario is valid. If the preferred view is correct suggesting that the move up has further steam, Rieki should fall faster (over reactive momentum interpretation).

Unlike Sugar, Coffee seems in a clearer impulse with further upside left to complete the primary circle 5. After which a multi-month retracement to previous 4 primary circle wave cannot be ruled out. The current Rieki is down and negative for Coffee, suggesting stagnation, retracement and underperformance.

Mukul Pal, CMT, Orpheus Capitals, Global Alternative Research