February 3, 2025
Mish's Daily
By Mish Schneider
“Brazilian analysts say the tariffs announced by U.S. President Donald Trump against Canada, Mexico and China could cause a currency-related inflation surge in Latin America's largest economy, clouding the central bank's outlook for interest rates.”
The article written in Reuters goes on to say that Brazil is facing inflationary pressures, which is why they raised their interest rates by 100-basis points.
The article then goes on to quote central bankers who say that tariffs could in turn, present “downside risk for price pressures in the event of a less inflationary scenario for emerging economies arising from shocks on international trade or global financial conditions."
This is exactly what I have been trying to relay to traders and investors.
It could spark inflation, it might now.
It could spark disinflation and a global slowdown, but it might not.
PRICE rules.
Let’s looks at the charts of EWZ, the iShs MSCI Brazil ETF.
On the Daily chart, EWZ cleared the 50-DMA and entered a recovery or recuperation phase.
Last Friday’s price lines up perfectly with what you don’t see on the weekly chart, a favored exponential moving average.
So, we can safely say a close over Friday’s high will correspond with a significant weekly breakout.
EWZ is outperforming the benchmark on the Daily chart and on par with it on the weekly chart.
Real Motion or momentum looks better on the Daily chart than on the weekly chart.
But again, it is most likely safe to say that a breakout over Friday’s high will most likely improve momentum.
The monthly chart has its own narrative.
A favorite indicator on the monthly chart is the Bollinger Bands. You can see the one that is red.
I like it when the price sits below the BB and then rises above it.
Plus, EWZ is gaining relative strength after looking oversold.
While there is a lot of overhead resistance, this ETF is now on our radar.
I hope that like so many amazing setups I have shared with you (Gold, gold miners, corn, IBM, Stratasys, and so on) all of which went on to give us huge gains, you keep this ETF on your radar now too.
Price rules, fundamentals drool
Educational purposes only, not official trading advice.
For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.
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Mish in the Media-Want to see more? All clips here
Outlook 2025, the PDF This will set you up on the right side of the market along with many picks
Business Week AM Mish covers why the TLT or long bonds is the best signal for risk on or off 02-03-25
BNN Boomberg Starts Minute 27:21 Mish talks tariffs, the unknowns and 3 picks 01-31-25
BFM89.9 Radio Malaysia Mish talks about how reading between the lines, the Fed is more concerned about an economic slowdown than inflation 01-31-25
Business First AM Mish talks about why gold making new all-time highs is great for gold miners 01-31-25
Coming Up:
February 4 The Watch List Schwab
February 7 Pre-Market Prep with Dennis Dick
February 10 Podcast
February 11 CNA TV Singapore
Weekly: Business First AM
ETF Summary
(Pivotal means short-term bullish above that level and bearish below)
S&P 500 (SPY) Spectacular turnaround from open until close-580-600 current range
Russell 2000 (IWM) 225-227 is now the area to get back above
Dow (DIA) 452 now the resistance to clear
Nasdaq (QQQ) 511 area key support
Regional banks (KRE) 64 to clear and 62 to hold
Semiconductors (SMH) 237 support needs to clear and hold over 242
Transportation (IYT) Its all about 68 support now
Biotechnology (IBB) Held where it needed to
Retail (XRT) 77 key support resistance to clear 81
iShares iBoxx Hi Yd Cor Bond ETF (HYG) 79 support
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