Bright Signs of an Early Carnival for Traders Utilizing Brazilian ETFs

The Trading Edge with Derek HoffmanThis is my first article for ‘The Edge’ trading column at Wall St. Cheat Sheet. My mission is to keep everything as simple as possible for you, yet educational and enhancing to your trading growth. You won’t find talk of straddles, strangles and all that other complex trader jargon here at my column. I’ll give you my secrets to trading success through a simple approach of observational analysis and a keen sense of directional indicators in the markets. The combination will provide you confidence to formulate your own decisions and execute your own trades. Enjoy!

Brazil’s beaches just became sexier. The late night fiestas will not stop until the sun rises and the last drop of each Caipirinha has been sipped. Why? Last week, Brazil won the 2016 Olympics bid!

Over the next 7 years, Brazil now has a double whammy in effect as host of the 2014 World Cup Soccer Championship and now the 2016 Olympics. What does this mean for Brazil? Continued economic boom.

One ETF I like to take advantage of the 7 year growth plan in effect for the Brazilian economy is EWZ, a Brazilian Index Fund. This red hot fund holds heavy exposure to financials and materials. As Rio develops the infrastructure to host the world for both the World Cup and Olympics, these sectors will perform strongly.

Over the past several years, money has been steadily flowing into Brazilian ETFs. Although the smart money has jumped in early to capture gains during the recent run-up, the bandwagon of hype should continue with more media buzz driving the Brazilian fiesta. Thus, we have an ETF in-play (which I was trading and noted at the moment the announcement was made).

“Investigate before you invest: Common trading wisdom is uncommonly wrong” – Dr. Brett Steenbarger



If you need a comparable to test the Brazil Olympics hypothesis, just look at China ETF FXI following their Olympic bid announcement and leading up to the Olympics in China. You’ll find traders and investors alike grinning happily when the Olympic torch was lit in Beijing.

“When independent patterns point to similar directional edges, we have especially promising hypotheses for trading” – Dr. Brett Steenbarger

Mini Free Trial AdMy bottom line: Brazilian ETFs present more upside bias and juicier returns than the U.S. markets right now. However, I’m very cautious at these overall levels (the larger, stronger U.S. tide could bring all global boats down on the near-term horizon). To follow my buy and sell signals for EWZ and the other trades in my portfolio, simply click here for a free 14-day, no risk trial of our acclaimed Premium Newsletter which has returned 284% since its inception in November 2008.