There is at least one crucial fact that makes EWZ’s 2015 upside, however modest, impressive: The ETF has not been battered by an almost 9.5% drop by Petrobras (NYSE: PBR), one of EWZ’s largest holdings. Shares of Petrobras, Brazil’s state-run oil giant, have been drubbed this year not only by falling oil prices, but a widening corruption probe, one that could ensnare Brazilian President Dilma Rousseff. [Bad Sequel for LatAm ETFs]
“A Reuters review of a 2009 federal investigation of Petrobras, and interviews with those who conducted it, indicates Rousseff missed opportunities to stop the graft before it erupted into a crisis so big it could push Brazil’s slow-growing economy back into recession next year,” Reuters reported.
Those are fundamental issues and for now, there is some reason for optimism that EWZ deliver near-term upside. The ETF is nearly 10% above its 52-week low and, given EWZ’s penchant for volatility, a 7.7% jump to its 50-day moving average is not out of the question in the coming weeks.
“Also is important is the fact it was able to hold a trend line that can be drawn across the 2000 top and along the 2008 bottom,” adds Captain John Charts.
