a tough latter half last year, and Brazil's economy--dominated by energy and mining--is sensitive to such changes. We could be seeing a turn here technically as well, based on an emerging pattern.

The daily chart below compares FCX (red) and the EWZ (green) in terms of percentage return. I have tossed in a correlation study to show closely these two assets are intertwined (blue). As of now the correlation is at 0.97 (with 1 being a perfect match).

It is clear that the return paths do move very closely with one another even as the absolute returns vary. Brazil has done better than Freeport, given the influence of crude pricing on that nation's economy. Nonetheless, given the very tight correlation, the fate of one is therefore very likely to be the fate of the other.

In addition, the Brazil ETF is developing a bullish symmetrical triangle pattern, shown by the orange sloping lines. The upside potential is indicated by the dark green vertical line, which would bring the EWZ back to the levels of last summer, when the return paths of both assets overlapped.

This was at the second lowest point of correlation, evident in the lower panel of the graph. That could mean a 20 percent up move if the pattern completes.

(Chart data provided by Thomson Reuters)

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