Equities in Brazil traded higher again today with the country’s benchmark Ibovespa index rallying over 2% and capping off a 15-day 11% rally where the index has only traded lower three times. Today’s rally also raised eyebrows among technicians as the Ibovespa, like a number of major US indices has broken its downtrend relative to the highs earlier this year. From a technical perspective, what’s not to like about Brazil?

One item may be the currency. Brazilian equities have broken their downtrend from the late March high, but from the perspective of a US investor, the weaker real means that the gains aren’t quite as impressive as they are down in Sao Paulo. After adjusting performance to account for the moves in currency markets, Brazilian equities have still rallied, but after today’s rally, they are only just now beginning to test the downtrend from spring highs. Don’t toast that Caipirinha just yet. 

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