On Tuesday, the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), the largest ETF tracking Latin America’s largest economy, rose almost 3% on volume that was 56% above the daily average.
Normally, that would be considered a positive sign, but EWZ entered Tuesday’s session as one of the 10 worst non-leveraged ETFs this year. Tuesday’s close at $39.16 is four cents BELOW where EWZ closed on March 23, 2009. The ETF, which flirted with $75 three years ago, has not closed above $50 since October 2013. [Brazil ETFs Look for Bottoms]
Not surprisingly, the forecast for EWZ held by some technical analysts is less than enthusiastic.
“Look at EWZ, we see that the price action is in a clear downtrend and appears headed for prior lows of 2008-2009 around $30,” writes Deron Wagner of Morpheus Trading Group. “EWZ has another 20% to 30% to selloff before hitting support.”
The thought of EWZ trading down to $30 is chilling to say the least. EWZ last traded below $30 in November 2008 during the global financial crisis. Prior to that, $30 was just a pit stop on the way up as EWZ almost made its way to $100 in the second quarter of 2008.