Brazil ETF, EWZ, continues to surge, +4.4% only today.
In early November we outlined our chase dogs logic. Brazil was one of the most interesting dogs, that eventually became stars. In mid November, after the vaccine news, we added to the dogs logic:
"The USD weakness has been a strong narrative, but currencies such as BRL are still dogs compared to the USD.
With Moderna's vaccine now becoming "reality", although the reaction is less euphoric" compared to Pfizer vaccine news, all things equal, the dollar should start fading versus EM FX (ex China). Global demand should be lifting all boats, commodities exporting countries as well,and BRL is a big one in this space."
Our last update on the Brazil logic was updated on Nov 30 when we added:
"BRL moving below the 200 day, EWZ breaking above the big resistance level and the EWZ…"
Below chart showing how EWZ has beaten IWM and absolutely crushed EEM.
We are looking for the next dog as chasing EWZ here "feels" a little late unless you are still in it…