Sunday
Jan302011
Some BRICs are Crumbling
Sunday, January 30, 2011 at 01:46PM Below are six-month stock market price charts for the four countries that make up the BRIC (Brazil, Russia, India, China) acronym. While Russia's equity market has been doing exceptionally well lately, the rest of the BRICs have been awful. As shown below, Brazil's Bovespa and India's Sensex both broke sharply below their 200-day moving averages last Friday. China's Shanghai is also below its 200-day. A move below the 200-DMA is generally thought to signify a shift from an uptrend or a sideways trend to a long-term downtrend. And after Friday's declines, an attempt to buy Brazil or India right now is like catching a falling knife.
Reader Comments (3)
A sell-off In Africa, AFK, -4.5%, Emerging Market Financials, EMFN, -3.2%, Emerging Markets, EEM, -3.1%, and Ford, -13.4, commenced a bear market in world stocks, VT, on January 28, 2011.
Most stocks have been monetized by the announcement of QE 2, where as gold stocks were decapitalized by the US Federal reserve purchase of debt; but today, with a market shift lower, that changed with gold and gold stocks moving higher; how long the gold stocks will move higher with gold is any one’s guess.
An epic investment and economic sea change has occurred: the Emerging Market Small Caps, EWX, are leading the way down in a debt deflationary sel-off at the hands of the FX currency traders, as is seen in the chart of EWX, VSS, and EEM.
The five part Elliott Wave governs investments and economies. The Emerging Market Financials, EMFN, entered an Elliott Wave 3 Down on January 1, 2011, and entered an Elliott Wave 3 of 3 Down on January 28, 2011. The third wave is the most sweeping and dramatic of all; it is the wave that builds wealth on the way up and destroys wealth on the way down. The world has passed from the age of leverage, economic expansion and prosperity … and into the age of deleveraging, economic contraction and austerity. With a falling median income level, and a rising 10 year US Government Note Interest Rate, $TNX, real estate sales will become quite rare, many homes will become vacant and many people will rent and not buy homes.
The chart of the Brazil Financials together with Brazil Small Caps, and the India Earnings, and the India Small Caps, suggests that the Brazil Financials, BRAF, are pulling Brazil Small Caps Down; whereas the India Small Caps, SCIF, are pulling the India Earnings, EPI, down .... BRAF, BRF, EPI, and SCIF.
Nice charts. Brazil's and India's stock index charts are furiously flashing SELL signals. I do not invest in those two countries at the moment but it is now a good time to buy inverse ETFs for those markets.. China's stock index chart is going downhill as well. I do invest in Chinese company stocks through Hong Kong but have none in my portfolio at the moment. Russia's stock index chart is still going strong but I do not find that communist country attractive at all as a place to invest, and I will never invest in that country, Thank you for sharing.
I think these charts are labelled wrong. For instance, the Bovespa peaked out at 73,000 at the beginning of November, not October. Same for the Sensex which peaked out at 21,000 at the beginning of November. And it seems like these charts end at the end of December.