Looks like the days of buying EWZ after a 20% correction and waiting out the recovery may be coming to an end for now. Last week, the Brazil Index Fund ETF, EWZ, broke out above a nine-month long downtrend.
*Chart created using TeleChart:
This is a very bullish development and opens up the prospect of an extended rally for EWZ. Petroleo Brasileiro SA (PBR), or Petrobras, Brazil’s major state-owned oil company, is executing an expanded sale of shares on September 29th to finance some major development plans which may increase the government’s ownership in the company. PBR will price the shares on Thursday. I am trying to wait for the market’s reaction to these events before re-initiating a position in EWZ.
Be careful out there!
Full disclosure: long PBR