Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I am yet to read anything from Zack's that made sense to me. Seems like they keep churning recommendations to keep themselves in business.
Brazil is definitely overbought on technicals and will likely pull back in the short term to test resistance at 2-3% down from here and if that fails, to the next one around 5% which will be a buying opportunity. The upside potential is much higher.
The trend upwards looks well established.
From a fundamentals perspective, I think the recent surge in Brazil is more due to easing of China concerns and expected rise in exports with a weaker Real than the hope for a change in the elections.
Brazil is an export driven country and its markets driven by commodities and inflation (inversely). Inflation is a problem that threatens the ruling party politically but increasing interest rates are making the Real weaker helping its exports. In the near past, they had strong Real and weak demand for exports. That situation improving should bode well for its markets.
I have no direct position in Brazil but watching EWZ for a pullback and a very small amount via EM funds.
@"cman" - Brazil is definitely overbought on technicals and will likely pull back in the short term to test resistance at 2-3% down from here and if that fails, to the next one around 5% which will be a buying opportunity. The upside potential is much higher.
I like these odds, lots of upside potential with some smaller downside retraction. Seems to me there are other oversold investments that have the potential for much larger pull backs (Biotech).
A separate thought regarding potentially oversold securities in general:
To me one risk with oversold investments is that they stay "out of favor" for long periods of time (dead money). Collecting a dividend with these oversold investments helps an investor remain invested. Also, I believe an option trading strategy (something I am not completely familiar with) could enhance total returns. I would suggest that option strategies are skills beyond most mutual fund investor's so finding mutual fund managers who have these skills and mandates might be worth considering.
Not convinced about the uptrend on the technicals yet. I use simple trendlines and if you draw one along the peaks on a weekly chart, the downtrend is not broken yet. There have been some head-fakes several times when the 40 weeks seems to be broken temporarily, but it comes down again. From a fundamental side, there may be a good case, but I don't understand it well enough.
Comments
Brazil is definitely overbought on technicals and will likely pull back in the short term to test resistance at 2-3% down from here and if that fails, to the next one around 5% which will be a buying opportunity. The upside potential is much higher.
The trend upwards looks well established.
From a fundamentals perspective, I think the recent surge in Brazil is more due to easing of China concerns and expected rise in exports with a weaker Real than the hope for a change in the elections.
Brazil is an export driven country and its markets driven by commodities and inflation (inversely). Inflation is a problem that threatens the ruling party politically but increasing interest rates are making the Real weaker helping its exports. In the near past, they had strong Real and weak demand for exports. That situation improving should bode well for its markets.
I have no direct position in Brazil but watching EWZ for a pullback and a very small amount via EM funds.
Brazil is definitely overbought on technicals and will likely pull back in the short term to test resistance at 2-3% down from here and if that fails, to the next one around 5% which will be a buying opportunity. The upside potential is much higher.
I like these odds, lots of upside potential with some smaller downside retraction. Seems to me there are other oversold investments that have the potential for much larger pull backs (Biotech).
A separate thought regarding potentially oversold securities in general:
To me one risk with oversold investments is that they stay "out of favor" for long periods of time (dead money). Collecting a dividend with these oversold investments helps an investor remain invested. Also, I believe an option trading strategy (something I am not completely familiar with) could enhance total returns. I would suggest that option strategies are skills beyond most mutual fund investor's so finding mutual fund managers who have these skills and mandates might be worth considering.