close icon

Bovespa Investors in for a Rough 2017

Prepare for more weakness in the Brazilian stock market

Brazil’s investors finally took a breath last year. After several years of slow, but steady decline, the country’s benchmark Bovespa index rose from as low as 37 046 in January to as high as 65 291 in October. So, basically, 2016 has been a great year. Unfortunately, 2017 looks like it is going to be nothing like it. Yes, the index continued climbing until late-February, 2017, but then the bulls ran out of power, allowing a retreat back below 62 500. Not a big deal, you might say, but the problem is that according to the Elliott Wave analysis of the chart below, the current weakness is just the beginning of a much larger decline.
elliott wave bovespa index daily chart
The daily chart of the Bovespa stock index shows the structure of the 2016 rally. As visible, a five-wave impulse has been drawn, indicating that an uptrend is in progress. However, the Elliott Wave Principle says that before it can resume, a three-wave correction in the opposite direction should occur. That is what we believe has been developing since last month’s high at 69 488. So far, the pullback is too shallow, which means the bears are probably not done yet. A natural downside target would be the resistance area of wave 4 of the impulsive sequence. In other words, if this count is correct, the Brazilian stock market index could be expected to revisit the area near 57 000 from now on. Maybe even lower.

In conclusion, 2017 is likely to revive the memories of 2015, not 2016. We do not expect a bear market that deep, but a noteworthy correction is a real possibility. Good investing opportunities would present themselves near its bottom.

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

You may also like:

Fibonacci Support Sends Nifty 50 to New High

In our last article about the Indian Nifty 50 index, published on May 19th, 2017, we shared an opinion that the price “is probably going to reach the 10 000 mark from now on. Maybe even 10 500.” Eleven months later, the Nifty 50 is trading near 10 550 after reaching 11 171 in late-January,…

Read More »

DJIA Bulls Still Alive After Two Months of Slaughter

DJIA bulls have not been in a good shape during the last two months, to say the least. The index registered its all-time high of 26 617 on January 26th, 2018, but has been in tailspin ever since, falling to as low as 23 360 on February 9th. After a swift but short-lived recovery to 25…

Read More »

Nikkei Bears Only Getting Warmed Up

The last time we wrote about the Japanese Nikkei 225 index (NKY) was October 18th, 2017. While the price was hovering around 21 360, the weekly chart of the benchmark allowed us to recognize a worrisome Elliott Wave pattern, suggesting the bulls should be able “to reach 23 000 or maybe even 24 000“, but…

Read More »

Dollar Index Bulls to Stop the Bleeding

2018 did not start well for the U.S. dollar, which fell against most of its rivals such as the Euro and the Japanese yen. As a result, the dollar index (DXY) did not shine as well. It fell to as low as 88.25 by mid-February before recovering to 90.23 a week later. The question we…

Read More »

CAC 40 Poised to Recover After Selloff

The recent market selloff spared no-one. Investors were reminded what fear was after stocks plunged sharply all around the globe. From the Dow Jones Industrial Average to the German DAX 30 and even in China, major benchmark indices suffered their biggest declines in years. Needless to say, French stocks tumbled, as well. The French CAC 40…

Read More »

DJIA Worst Day Ever in Elliott Wave Context

The DJIA fell by 1175 points on Monday, marking the worst daily decline in its entire 122-year history. In percentage points, however, yesterday’s selloff was not as big as Black Monday‘s 508-point crash on October 19, 1987, but it was still big and fast enough to make some investors wonder if this is the end…

Read More »

DAX 30 Plunges to 12 700. What’s Next?

It has been a bad week for the German DAX 30. The benchmark index saw its worst weekly selloff in over two years after it plunged from 13 387 to 12 700 for a total loss of 5.1%. The crash seems a bit surprising to economists, who expected the stock market’s rally to continue on…

Read More »

More analyses