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EWZ Near Critical Support at 65, "Canary in the Coal Mine" for Global Hot Money

|Includes: ACWI, iShares MSCI Brazil Capped ETF (EWZ)
Thanks to a commenter on my latest Jan 26 article for mentioning EWZ, I've previously called EWZ a good "canary in the coal mine" for the health of global markets, since it's been the favorite BRIC of hot money. 

I noted EWZ's loss of relative strength in a Jan 14 Instablog, where I wrote:

"Brazil is one of the most favorite emerging markets of speculators.  Should it continue to lose relative strength, as it has been doing since the beginning of 2010, that would be a noticeable shift in global trading sentiment."

EWZ is now at critical support around 65, easily seen in the first chart below.  It is also deeply oversold.  If it doesn't hold and rally here, then that will be another big negative for global market bulls.

Looking at the second chart, which shows EWZ relative to ACWI, MSCI All Country World Index, my real-time proxy for global equities, EWZ's global relative strength is now well below its 100-day EMA for the first time since Jan 2009. 

As you can, EWZ's global relative strength turned up in late 2008, just behind China's doing so, witn whose economy Brazil's is now closely linked (iron ore, soybean exports). 

These emerging markets turned up in late 2008, on the basis of a massive stimulus package in China, well before the U.S. markets bottomed on Mar 6-9, 2010.  Since they led global markets up, that's why I keep emphasizing their critical role in now leading them down, see my Jan 23 article (from a Jan 21 Instablog)

Left click on charts to enlarge.