Strykr Analysis
NeutralStrykr Pulse 48/100. Stasis in Brazil ETF signals indecision, not conviction. Threat Level 4/5.
If you’re the kind of trader who loves volatility, the Brazilian ETF EWZ has been a cruel joke lately. The price is stuck at $37.06, not just for a day or two, but for three straight sessions. No pulse, no drama, just a flatline. In a world where everything from AI stocks to crypto is melting down or ripping higher, Brazil’s flagship equity proxy has all the excitement of a Sao Paulo traffic jam at 2 a.m. nothing moves, nobody cares.
But here’s why you should care: when the “LatAm risk trade” goes quiet, it’s often the setup for fireworks. Brazil is the original emerging-market roller coaster. It’s the place macro tourists go to get rich or get wrecked. The fact that EWZ is frozen in time while global markets are whipsawing is not a sign of stability. It’s a sign that the market is waiting for something big, maybe a catalyst, maybe a crisis, maybe just a reason to remember Brazil exists.
Let’s talk facts. The price action is a monument to boredom. EWZ closed at $37.06 for three sessions in a row, a statistical anomaly in a market that usually trades like a caffeinated squirrel. Volume is down, implied volatility is scraping the bottom of the barrel, and the options market is yawning. Meanwhile, the macro headlines are all about inflation, US rates, and the AI bubble. Brazil is nowhere to be found. That’s not just a lull, it’s a vacuum, and vacuums in emerging markets never last.
The context is fascinating. Brazil is supposed to be the poster child for the “commodities in, tech out” rotation. The country’s economy is levered to metals, ags, and energy. When commodities rip, Brazil usually follows. When commodities crash, Brazil is supposed to tank. But right now, commodities are in meltdown mode, and EWZ refuses to budge. That’s either a sign of resilience or a market that’s about to wake up in a bad mood.
Historically, EWZ has been a volatility machine. The ETF has a beta of 1.4 to the S&P 500 and an even higher correlation to emerging-market sentiment. In 2023, it was up +22% in six weeks after a surprise rate cut. In 2024, it dropped -17% in a month when Lula spooked investors with fiscal theatrics. Now, nothing. The last time EWZ went this quiet was just before the 2020 COVID crash. Not saying that’s what’s coming, but the setup is eerily similar.
The technicals are almost embarrassing. The price is pinned at $37.06, with the 50-day and 200-day moving averages converging like a pair of bored snakes. RSI is at 51, which is as close to “meh” as you can get. There’s a minor support at $36.80 and resistance at $38.00, but nobody seems interested in testing either. The options market is pricing in a 5% move over the next month, which is basically nothing for Brazil. It’s like the market collectively decided to take a nap and forgot to set an alarm.
So what’s the real story? The market is paralyzed by uncertainty. Brazil is caught between two narratives: the bullish story of commodity supercycles and the bearish story of global risk-off. The local economy is muddling through, inflation is sticky, and the central bank is stuck in neutral. Foreign flows are flat. The only thing that could jolt EWZ awake is a macro shock, either a surprise from China, a Fed pivot, or a commodities reversal. Until then, the market is stuck in limbo.
Strykr Watch
The Strykr Watch are almost comically obvious. Immediate support is at $36.80, a break below that and the next stop is $35.50, where buyers showed up last quarter. Resistance is at $38.00 and then $39.25, a level that’s been a graveyard for rallies. The 50-day and 200-day MAs are converging just below spot, which usually means a big move is coming. RSI at 51 is a coin flip, but implied volatility is starting to creep higher. Watch for a spike in volume or a macro headline to break the spell.
The risks are classic emerging-market fare. If commodities keep crashing, Brazil could get dragged down in the undertow. A hawkish Fed could trigger outflows and currency pain. Political risk is always lurking, one tweet from Lula and the market could gap lower. The real risk is getting chopped to death in a rangebound market while waiting for the breakout that never comes. This is a market that punishes boredom and rewards patience, until it doesn’t.
The opportunity is in the setup. When EWZ finally moves, it tends to overshoot. A break above $38.00 targets $39.25 and then $41.00 if the macro winds shift. A flush below $36.80 opens the door to $35.50 and maybe lower if global risk sentiment sours. The options market is cheap relative to realized volatility, so straddle buyers could finally get paid. For directional traders, the play is to wait for the breakout and chase with tight stops, no hero trades in the chop.
Strykr Take
This is a classic “calm before the storm” setup. EWZ is too quiet for too long, and that never lasts in Brazil. The next move will be fast and probably violent. The side that gets it right will look like geniuses. The rest will be left wondering how they missed the signal. Watch the tape, wait for the breakout, and don’t get lulled to sleep by the calm. The market is setting up for a regime change, and Brazil will be the first to tell us which way the wind is blowing.
Sources (5)
A top economist says Kevin Warsh is a 'reasonable' choice for Fed chair, but his legacy hinges on one key issue
Moody's economist Mark Zandi says Kevin Warsh is a 'reasonable' Fed chair pick with strong credentials. Zandi says Warsh's real test will be keeping p
Jim Cramer Defends Trump: “He Brings Down Prices”
For better or for worse, Mad Money's Jim Cramer cannot be accused of being politically partisan.
Family offices brace for higher inflation with real estate and alternative investments
More than 60% of U.S. family offices cited interest rates and inflation as among the top risks to their portfolios this year, according to a new surve
Nasdaq heading lower but US stock futures cut losses as commodities meltdown eases
US stock losses were trimmed as the first opening bell of the week and of February approached, as investors braced for a big week of corporate earning
Trump's Flat Medicare Advantage Rate May Harm Seniors' Choices
Even before the Trump administration said the 2027 Medicare Advantage payment rate will be flat, insurers were pulling back from unprofitable markets.