ETF investors looking for a single-country opportunity can consider Latin America’s largest economy: Brazil. For traders seeking to lever up profitability with double exposure, there’s the Direxion Daily MSCI Brazil Bull 3X ETF (BRZU ).
Global investment firm JP Morgan is already taking notice of Brazil. Per an Investopedia article, the “investment bank expects the country’s leading stock gauge, the Ibovespa, to reach a lofty end-of-year high of 134,000 amid a continuing shift from tech names to cyclical plays in the financial and basic materials sectors as global economic activity recovers.”
“We expect growth to pick up and the U.S. dollar to slightly weaken globally, providing room for value stocks to keep rallying,” the firm’s head of equity strategy Emy Shayo told Bloomberg in an interview late last year.
Leverage-hungry traders who are bullish on Brazil can add BRZU in their toolbox. BRZU seeks daily investment results equal to 200% of the daily performance of the MSCI Brazil 25/50 Index, which is designed to measure the performance of the large- and mid-capitalization segments of the Brazilian equity market, covering approximately 85% of the free float-adjusted market capitalization of Brazilian issuers.
Within the past few months, BRZU is up over 60%, and more strength could be ahead through the rest of 2021. Like the rest of the world, the country’s economy is looking to heal as a Covid-19 vaccine begins to take effect.
Is Momentum Building For Brazilian Stocks?
What traders will want to know is whether momentum is building for Brazilian equities. The MSCI Brazil index has been able to rise 33%, which is four times that of the S&P 500.
The index has fallen below overbought levels using the relative strength index (RSI) so a buy opportunity could be brewing as other single-country opportunities like China might be overbought. Another strong signal is in the 50- and 200-day moving average.
The index has yet to return to pre-pandemic levels, but that could be changing. The 50-day moving average moved past the 200-day moving average on September 19, 2020.
This movement of the short-term moving average above the long-term moving average is often referred to as the ‘golden cross’. The signal is a potential breakout indicator, and given the index’s performance the last few months, it could be well on its way.
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