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Freeport vs Indonesia: The Elliott Wave Outlook

It looks like Freeport is going to end up as a winner in the Grasberg saga

Exports from Indonesia’s Grasberg copper mine have been halted for 10 weeks now. As a result, shares of Freeport-McMoran, one of the world’s largest copper producers and majority stake owner of the mine, recently declined from $17.06 in January to $11.92 this Monday. And while the company is still negotiating the terms of a new export deal with the country’s government, the Freeport’s hourly price chart is already pointing higher for the stock.
elliott-wave-chart-freeport-mcmoran
The chart allows us to put the recent plunge into a proper Elliott Wave perspective, in order to see where it fits into the big picture count. As visible, Freeport-McMoran stock rose from a low at $9.24 in mid-October, 2016, to as high as $16.42 forty days later. More importantly, that recovery took the shape of a five-wave impulse, which means the trend is up. According to the theory, a three-wave correction follows every impulse. Here, we could easily recognize an expanding flat correction, whose wave B makes a new swing high at $17.06. In this respect, the selloff people think was caused by the Grasberg mine dispute is actually a natural impulsive wave C, which completes the entire wave (2) corrective sequence exactly at the 61.8% Fibonacci level! What a coincidence!

If this analysis is correct, Freeport’s 5-3 wave cycle is complete and the trend could be expected to resume in the direction of wave (1). The solution to Freeport’s problems in Indonesia remains unknown, but “the habit of the market is to anticipate, not to follow.” Right now, it seems to be anticipating a happy ending for the miner. Let’s see…



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