Brazil’s President is being accused of obstructing justice. The market is taking this very seriously as Brazil ETF EWZ is trading in the 32s in the pre market. That’s down roughly 15% from yesterday’s close at 39.
Who knows what the implications of this will be, but technically there has been support in 30.50-31.50 range time and again over the past couple of years. This is the key area to watch in the coming days/weeks.
All of a sudden every new buyer in 2017 is down on their position. Think about all of the hot money that has chased emerging market outperformance so far this year.
In the recently released BAML Asset Allocation Survey, we saw a 5 year high in managers overweight emerging markets.
Here’s a list of the largest holdings in the fund. Most of these names trade in the U.S.
If you’re convinced this is a knife catching opportunity there is a 3x levered long ETF BRZU if that is your sort of thing (by no means am I recommending it). If we get a move to 35s, it’ll be worth taking the quick trades off.
Trade ’em well