Potential Way To Play Brazil Right Now

Companhia Siderurgica Nacional (SID) is showing signs of a character change, as you can see in the chart below the 20 day moving average has been resistance January and it has capped every rally except one that was short lived. As of Friday, the 20 day is starting to flatten out and SID is now above the 20 day moving average for 2 days.

The entire region has shown a subtle character change like we pointed out on 7/11/2013. The trade is simple: own the stock above the 20 day and use either $2.55 or a close below the 20 day as your stop.

Going forward, the stats for owning Brazil via the iShares MSCI Brazil Capped ETF (EWZ) are stunning; there have been 23 instances that the Bovespa has lost more than 20% in the prior 6 months, 6 months later it has been up 91% of the time 21/23 for an average percentage change of 30.54%. SID should benefit from these odds if they hold true again.

Companhia Siderrgica Nacional operates as an integrated steel producer primarily in Brazil. The company principally produces carbon steel and various steel products for automotive, home appliance, packaging, construction, and steel processing industries. Its products include slabs, which are semi-finished products used for processing hot-rolled, cold-rolled or coated coils, and sheet products; hot-rolled products, including heavy and light-gauge hot-rolled coils and sheets; cold-rolled coils and sheets; galvanized products, such as flat-rolled steel coated with zinc or a zinc-based alloy; and tin mill products, which consist of flat-rolled low-carbon steel coils or sheets comprising tin plate, tin free steel, low tin coated steel, and black plate products.

The company also owns interests in various mining assets, including the Casa de Pedra mine and the Namisa mines that produce iron ore and are located in Congonhas; TECAR, a solid bulk seaport terminal located in Itagua port in the state of Rio de Janeiro; Minerao Bocaina that produces dolomite and limestone and is located in Arcos in the state of Minas Gerais; and a tin asset located in Ariquemes, in the state of Rondnia. In addition, it engages in logistics business that comprises railway and port facilities; production and sale of cement; and generation of electric power with hydroelectric and thermoelectric sources for industrial consumers. The company offers its products to customers directly through its sales force; and through independent distributors for subsequent resale, as well as exports its products through brokers primarily in Asia, North America, Latin America, and Europe. Companhia Siderrgica Nacional was founded in 1941 and is headquartered in So Paulo, Brazil.

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