Want to Identify Market Trends? Watch Elliott Wave Analysis at Work
How it anticipated a multi-year crash in one of the world's biggest commodity markets

By Elliott Wave International

The large fowl we call "Turkeys" were given that name by the British, who thought the bird came from the country of Turkey. Truth is, turkeys are native to North America. And yet, the question no one will ever hear around the dinner table on Thanksgiving is, "Who wants gravy on their North America?"
This story recalls another fallacy -- or fowl-acy! -- that likewise persists in the face of facts to the contrary; namely, the mainstream financial theory known as "fundamental market analysis." The notions behind this widely held belief go like this:

Financial market prices are driven by external events, or "fundamentals," which can include crop-destroying weather patterns, political unrest, earnings reports, crop data, supply and demand numbers and so on.

This theory is as old as the name "turkey," and as commonly accepted!
Yet, our friends at Elliott Wave International have a birds-eye view into a very different way of interpreting market behavior. The "bible" on all things Elliott is Frost and Prechter's classic Elliott Wave Principle -- Key to Market Behavior (EWP, for short), which provides this ground-breaking counterclaim:

"Sometimes the market appears to reflect outside conditions and events, but at other times it is entirely detached from what most people assume are causal conditions. The reason is that the market has a law of its own. It is not propelled by the external causality to which one becomes accustomed in the everyday experiences of life.

"The path of prices is not a product of news."

What "law of its own" does the market follow? EWP continues:

"The market's progression unfolds in waves. Waves are patterns of directional movement. Each pattern has identifiable requirements as well as tendencies. The Wave Principle is the only method of analysis that also provides rules and guidelines for forecasting."

To understand Elliott wave analysis at work in actual world markets, let's review the recent history in an often-volatile commodity markets: sugar.
This chart captures the huge rally in sugar prices during 2015-2016, an 80% increase which earned sugar the title of "best-performer of all commodities that trade on U.S. exchanges." (Oct. 3, 2016 Seeking Alpha)
At its peak in mid-September 2016, sugar prices orbited a four-year high. And, thanks to a raft of bullish "fundamentals" -- such as rising demand, falling supplies, and a drought in Brazil -- all mainstream signs pointed to sweeter gains for the sweet soft.

• "The multiyear [sugar] bear turns bull. The second year of deficit can launch the sweet commodity even higher." Aug. 15 Seeking Alpha

• "Sugar prices hit four-year high on supply concerns. Prices have started rising in full swing." Oct. 4 Nikkei Asian Review

• "A sweet market for sugar bulls. The fundamentals that drove the rise in prices earlier this year have remained largely unchanged." Sept. 16 Financial Times

Investors: Are You in Danger of Emotion-Driven Decisions? You're Not Alone.
Or...Your Defense Against FOMO

By Elliott Wave International

As the winter holidays draw near, many of us will fall victim to the affliction we call "S.N.O.M.O." -- the Sudden Need of More Objects (to own, play with... and eventually, store in the basement).
Lists and budgets are no match for SNOMO once we take our first steps into a big-box store with its flashing signs and blazing blue lights. Within minutes, a powerful urge takes over and suddenly we're leaping in front of an old lady with a cane for the last cat-massage combing kit despite not knowing a single person who owns a cat, self included.
Our friends at Elliott Wave International assert that the same fear and emotion driving holiday shoppers to make irrational purchases ALSO drives the year-round speculation by investors in uber-hyped "it" markets.
To investors and traders, this phenomenon is known as FOMO -- the Fear of Missing Out. And we can't cure shoppers' SNOMO, for investors the ultimate defense against the sudden need of more is Elliott wave analysis.
The Wall Street bestseller and ultimate resource guide on all things Elliott., Elliott Wave Principle -- Key to Market Behavior writes:

"The Wave Principle exists partly because man refuses to learn from history, because he can always be counted upon to be led to believe that two and two can and do make five.

"He can be led to believe that the laws of nature do not exist (or more commonly, 'do not apply in this case') ... and that the fears which reason supports will evaporate if they are ignored or derided."

Essentially, the Wave Principle acts as a mood-stabilizer to man's innate fears of missing out on the next big thing. It provides a defined forecasting method for looking at markets, including a clear set of rules and guidelines, which govern the extent and direction of trends.
One of the starkest examples of Elliott waves combatting investor emotion comes via the recent history in bitcoin. In late 2017, the cryptocurrency had gone from a "fake," "fringe" novelty to the new darling of Wall Street -- after rocketing in 2017 alone from below $1000 per coin to above $20,000 by December of that year.
Every major company from Apple Store to Zappos to Playboy began accepting Bitcoin as a payment medium. Average citizens were literally mortgaging their homes to buy the "hottest new investment trend" (Dec. 12 Forbes). And mainstream analysts were re-upping their bullish bitcoin forecasts for the year ahead, as these headlines from December 2017 reveal:

• "Bitcoin could easily reach $40,000 by the end of 2018." (CNBC)
• "Bitcoin: Mystery Investor Bets a million it hits $50,000." (Forbes)
• "Bitcoin Will Surge Above $100,000 in 2018" (CNBC)

As one Wall Street bitcoin strategist summarized in a December 22, 2017 article: "Make no mistake - the long-term bull market is firmly intact." (The Street)
The pressure to get in on Bitcoin before the next thousandth-percent price surge could be felt the world over. Investors collective emotion was at an all-time high, and most speculators espoused the sentiment alluded to in Wave Principle -- Key to Market Behavior -- namely; that the rules of nature and gravity didn't apply to bitcoin.
By stark contract, Elliott Wave International’s December 2017 Elliott Wave Financial Forecast took an objective stance based on bitcoin’s completed bullish Elliott wave pattern and identified the hallmarks of a late-stage bubble, issuing this warning to crypto-crazed investors:

"A rising sea of euphoria, ever-higher price projections and the capitulation of financial sophisticates only reinforce our stance:

"We are more convinced than ever that bitcoin will disappoint its late-coming enthusiasts."

Result: From its December 2017 peak of near $20,0000 Bitcoin plummeted 70%-plus to below $6000 per coin in just two months! (By the end of 2017, bitcoin was trading near $3000, an 80% crash.)
In fact, the first quarter of 2018 was the worst period for cryptocurrencies in history. Here again, Elliott Wave Principle -- Key to Market Behavior offers singular insight into the psychological machinations of this type of market's reversal: