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Msci Brazil (EWZ) recently raised above the main bearish resistance line at $51.00 switching officially to bullish mode. Since May 08 double top at $102.00 prices started declining sharply until the breakthrough of the main bullish support line at $86.50 on early June 08 changed the overall outlook to bearish. The downtrend, which was defined by a customary pattern of lower highs and lower lows, found initial support at $68.00 where a corrective up move evolved pulling back prices to $75.00 before resuming the contraction.

The second corrective up move emerged from support at $51.00 and touched $65.00 where a Long Tail Down pattern halved the value reaching $38.00. The Low Pole pattern that developed after the final November 08 sell off to $27.00 projected an upside target set at $55.50, a level reached just recently. After trading sideways for almost 6 months prices penetrated the key resistance line at $41.00 on the end of March 09 clearing the way for additional upside movement. The uptrend developed reaching quickly $51.50 where it bounced off the main resistance line before successfully penetrating it on the second attempt at $51.00. Prices are expected in the near future to pull back towards the intermediate support lines at $51.00 first and possibly to $49.50 before resuming the uptrend with medium term target at $65.50. Relative Strength vs the Msci Emerging Markets is positive in the long run implying that Msci Brazil will probably outperform. (Exhibit 1.1). Relative Strength vs the S&P 500 index has been positive in the long term since beginning of 2009 predicting also for the future a better performance than the Us index. (Exhibit 1.2). Stay long and increase at double top breakout at $58.50 with medium term target set at $65.50. On the downside lighten at double bottom breakout at $50.00 and close all longs at penetration of the main bullish support line now crossing at $45.00 with possible downside contraction to $41.00.





Exhibit 1.1 - Msci Brazil compared to Msci Emerging Markets – Brazil will likely outperform emerging markets in the long run




Exhibit 1.2 - Msci Brazil compared to S&P 500 Index – Relative Strength turned positive for the long term.