{"id":35969,"date":"2016-08-28T01:21:18","date_gmt":"2016-08-28T08:21:18","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=35969"},"modified":"2016-08-28T01:22:06","modified_gmt":"2016-08-28T08:22:06","slug":"key-lessons-brazil-etf-trade","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2016\/08\/28\/key-lessons-brazil-etf-trade\/","title":{"rendered":"Key Lessons from the Brazil ETF Trade"},"content":{"rendered":"

Back in October, 2009 When Brazil won the 2016 Summer Olympics, I heralded the news as an opportunity to invest in a country that promised to grow faster than the United States<\/a>. The iShares MSCI Brazil Capped (EWZ) never quite matched its peak from 2008 but managed to ride the wave of a post-recession, commodity boom into 2010\/2011. After that, Brazil began an orderly multi-year tumble. Needless to say, Brazil severely disappointed. <\/p>\n


\n
\"The<\/a>
The weekly view makes the downward trend in EWZ very clear.<\/figcaption><\/figure>
\nSource: FreeStockCharts.com<\/a><\/strong>
\n<\/center><\/p>\n

As the Brazilian story unravelled, I switched gears to more short-term trading starting with an idea that came after Brazil reversed its post-Olympics gains<\/a>: buy EWZ after a 20% pullback. I formalized this rule in May, 2010<\/a> after observing EWZ rally twice from 20% corrections and trading through them.<\/p>\n

After 2011, I took a three-year hiatus. I bought<\/a> the iShares MSCI Brazil Capped (EWZ) once more in October, 2014. My purchase came at a time when EWZ was tumbling toward the bottom of a multi-year downtrend channel. For the next 8 months, EWZ struggled with the bottom of that channel before finally breaking down on the way to prices last seen in late 2004. I stubbornly stuck to my position but failed to build on the position as the news from Brazil appeared so dire. From there to the Olympics, EWZ doubled, and I finally decided to take my loss.<\/p>\n


\n
\"EWZ<\/a>
EWZ enjoyed a roust recovery going into the Olympics off the 12-year low set in January.<\/figcaption><\/figure>
\nSource: FreeStockCharts.com<\/a><\/strong>
\n<\/center><\/p>\n

The timing of my sale was not an accident. With the 2016 summer Olympics ending and a presidential impeachment process looming, I figured the good cheer could come to an end (almost like sell on the news). I waited for a full week to see whether momentum would resume. After observing the gyrations in the wake of the Economic Symposium at Jackson Hole<\/a>, I decided it was a good time to sell. As the daily chart above shows, the Olympics is starting to look like a definitive peak in EWZ. At minimum, a retest of the bottom of the previous downward channel is likely in play.<\/p>\n

I learned a major lesson from this experience. First of all, I left my EWZ position on “automatic” for far too long. I never re-examined my trading thesis and never even constructed a plan for adding more to the position to profit from what I should have concluded would be an eventual recovery. If I had, I could have even made money on the trade.<\/p>\n

So now, I wait for the next 20% correction in EWZ from its last peak. Such a pullback would put the ETF at $28 and just below the bottom of the previous downward trend channel. My alerts are ready. Stay tuned.<\/p>\n

Be careful out there!<\/p>\n

Full disclosure: no positions<\/p>\n","protected":false},"excerpt":{"rendered":"

Back in October, 2009 When Brazil won the 2016 Summer Olympics, I heralded the news as an opportunity to invest in a country that promised to grow faster than the United States. The iShares MSCI Brazil Capped (EWZ) never quite matched its peak from 2008 but managed to ride the wave of a post-recession, commodity … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1303,181,483,921,62,1210],"tags":[183,1767,731],"class_list":["post-35969","post","type-post","status-publish","format-standard","hentry","category-bottom","category-brazil","category-breakdown","category-downtrend","category-technical-analysis","category-trading-model","tag-ewz","tag-ishares-msci-brazil-capped","tag-politics"],"yoast_head":"\nKey Lessons from the Brazil ETF Trade - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2016\/08\/28\/key-lessons-brazil-etf-trade\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Key Lessons from the Brazil ETF Trade - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"Back in October, 2009 When Brazil won the 2016 Summer Olympics, I heralded the news as an opportunity to invest in a country that promised to grow faster than the United States. 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