One of our FAVORITE contrary indicators is the launch of a new Exchange Traded Fund (ETF). By the time there is sufficient demand for one of these investment vehicles, and it’s actually put together and rolled out, the trend has more often than not already reversed on the investment theme it’s trying to represent.
For a great recent example of this phenomenon, check out COPX, an ETF focused on copper miners – since it’s launch, it’s gone nowhere but DOWN.
Well we got a beauty of a short candidate today – the Global X Brazil Mid Cap ETF (BRAZ) – which had a nice front and center listing on Seeking Alpha’s homepage today:
The ETF launches conveniently after emerging stock markets had already put in a top – actually as far back as January!
Source: StockCharts.com
It’s been a series of lower highs and lower lows for Brazil since January – the classic trademark of a downtrend. Oh, what a perfect time to setup an ETF so that naive American investors can “get in on the Brazil story.”
Looking for a short pick for the rest of 2010? Look no farther than BRAZ. If you play it right, maybe it’ll even pay for a trip to Rio for ya.
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