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The Brazilian Stock Market At A Make-Or-Break Level In July 2018

Last year, we wrote about Brazil’s Stock Market Impressive Breakout. Visibly, Brazil was one of the outperformers in the emerging markets space. In 2018, so far, emerging markets were weak, and Brazil was no exception to this rule. As China’s Stock Market Is At Make-Or-Break Level, we observe a similar thing in Brazil. July 2018 will be a make-or-break month for Brazil’s stock market.

Right now, with emerging markets being ‘threatened’ by the trade war, it is clear that leading emerging market indexes are suffering from it. However, it is wise for investors to ‘start with the charts’, not with the news. Looking at the news would, as always, make you very concerned and nervous. What about this one for instance: Mobius Says Trade War Is Just a Warm-Up Act for Financial Crisis. You will only find this type of headline nowadays, and that’s because financial media will sell more banner views with concerning news.

Smart investors are focused on the leading patterns on the long term charts.

The stock index in Brazil is the Bovespa. Its chart is embedded below.

The Brazilian stock market retraced in 2018 after a strong breakout above all-time highs in the last months of 2017. The breakout point is now tested as seen on the chart (green circle). This month will become very important: recent weakness in emerging markets, triggered by the so-called trade wars, sent the Brazilian stock market to breakout levels.

Clearly, the Brazilian stock market arrived at a make-or-break level. Smart investors watch the close of the Bovespa at the end of July 2018. As long as it trades above 72k points there is no reason to be concerned at all, on the contrary in fact!

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