Key Market Views: Bearish Brazilian Stocks

We initiated a 'bearish Brazilian stocks' view in our key market views portfolio on July 8, soon after the Brazilian market opened for trade. The Bovespa equity index sliced through key neckline support around 49,500, setting Brazilian stocks up for a major 'head and shoulders' technical reversal pattern. Despite some retracement towards the end of trading yesterday, we are targeting 48,000 as the next key support level for the index. A break below here would see a continuation of the reversal, in our view, with further downside potentially as low as 44,000.

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