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Elliott Wave Financial Price Forecasting

Copper/EM to surge higher in 2014

by m.tamosauskas| December 19, 2013 | No Comments

01_131217_MSCI_EM_Correlation

The base metal Copper is commonly named ‘Doctor Copper’. The definition is a result of its ability to diagnose and predict turning points in the global economy. Copper is widely used in most sectors of the economy – from homes and factories, to electronics and power generation. The demand for copper is often viewed as a reliable leading indicator of economic health and this demand is reflected in the market price of copper. Generally, rising copper prices suggest strong copper demand and hence a growing global economy, while declining copper prices may indicate sluggish demand and an imminent economic slowdown. So, by trying to forecast the future price of copper, we may gain some insight as to the strength of the global economy.

Copper prices are positively correlated to the stock market, specifically the S&P 500. But there was a price dislocation breaking this relationship last June ’13 onwards where copper continued its counter-trend decline from the Feb.’11 highs, whilst the S&P 500 continued its upward march to new record highs. This can be explained as many emerging market stock indices that are positively correlated to copper were continuing to trend lower. This relationship can be observed between LME Copper and the MSCI Emerging Market Index – see chart below.

Both declined sharply during the financial-crisis of ‘07-’08, subsequently staging an impressive upside recovery during ’09-’10. But, beginning from early 2011, copper and the MSCI Emerging Markets Index began a counter-trend decline that remains in progress. By extrapolating the Elliott Wave count for one, we will have much better chances in determining the direction of the other. In this special EW-Compass issue we are introducing our primary Elliott Wave count for copper and the correlation between this base metal and MSCI Emerging Markets Index. Both suggest a finalising sell-off begins in early 2014 so as to complete the overall counter-trend decline that began three years earlier. But once completed, Copper and the MSCI EM are expected to surge higher beginning the last phase of the ‘inflation-pop’ with price expectancy to new record highs.

In tomorrow’ss EW-Compass report we will introduce additional chart showing our primary count for the Copper with downside targets in early 2014 and upside targets that would follow.

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WaveTrack International is a financial price forecasting company dedicated to the Elliott Wave principle and work of the R.N. Elliott. Clients include Investment Banks, Pension Funds, Total/Absolute-Return/Hedge Funds, Sovereign Wealth Funds, Corporate and Market-Making/Trading institutions and informed individuals -- & just about anyone who is affected by directional price change.

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