China's economy is slowing. Its stock market began to crash back in July. And the volatility rocking financial markets has been widely linked to the recent yuan devaluations by China's central bank.
"Surprise" has been a common word used by investors and financial pundits to describe the devaluation -- as in, "China's central bank surprise devaluation of yuan."
But what if we told you it wasn't a surprise -- it was in fact an expected event?
Below are three excerpts from analysis that EWI's own Chris Carolan published in his Sun-Tue-Thu Asian-Pacific Short Term Update on July 30 (several days before China's central bank first move to devalue the yuan against the U.S. dollar), then on Aug. 9 and Aug.11 (bold added).
Why the Nifty and many other emerging market stocks screamed "Buy!" three months ago
By Elliott Wave International
From Elliott Wave International's February Asian-Pacific Financial Forecast (published Feb. 7):
...Bloomberg reports that "more than $7 billion flowed from ETFs investing in developing-nation assets in January, the most since the securities were created." Such massive selling...supports our view that emerging markets are ending large-degree three-wave declines.
Conventional observers are asking the question, "Is this 1997 all over again?" (The Economist)
The way we see it, the return of such headlines in January supports another significant low now -- from a contrarian perspective.
EWI's Asian-Pacific Short Term Update editor Chris Carolan soon echoed those bullish views. Here is a forecast the APSTU made for India's Nifty Index on March 4:
The strong short-term Nifty rally has pushed prices above their upper daily Keltner channel resistance level.
Look for this [rally] up to push through the 2014 highs at 6400 in coming sessions.
The intraday Keltner channel slope is steep, indicating this trend has enough strength for sharp short-term gains.