This post was just published on ZYX Emerging Change Alert.
We are upgrading Brazil in the short-term to Mild Buy. The ETF of choice is EWZ. The buy zone is $54 to $58. Suggested buy points are $54.68, $55.62, $56.26, and $57.29.
The strategy behind this call is ‘reversal to mean.’ The Brazilian market has lagged other markets this year. The Brazilian market is likely to catch up. The Brazilian market is up against stiff technical resistance; however if the rally in the global stock markets continue, the resistance is likely to be broken.
The composite result of our indicators for the short-term in 10 different categories is Mild Buy. Here is the breakdown:
- Economic Indicators: Mildly Positive
- Fund Flows: Negative
- Commodity Price Movements: Negative
- Relationship Between Currencies: Negative
- Sentiment: Positive
- Earnings Momentum: Mildly Negative
- Risk Appetite: Positive
- Quantitative Indicators: Mildly Positive
- Technical Indicators: Negative
- Geopolitical Indicators: Neutral
The composite of our medium-term indicators on Brazil is Strong Buy; long-term composite is also a Strong Buy.
