Down But Not Out On Peruvian Stocks
IGRA Equity Index and Daily RSI
Peru’s IGRA equity index is showing a great deal of respect for the 18-month trendline resistance, as global markets take a breather. The daily relative strength index (RSI) for the bourse is implying that Peruvian stocks are looking overcooked, potentially acting as a sell signal for investors.
I don’t rule out the possibility that a retracement of recent gains may be at hand, and my tight 9,240 stop is still firmly in place. I’d go neutral, though, in case of a push below this level, at which point I’d wait for a more attractive re-entry point down the line.
Nevertheless, the 200-day moving average may act as short-term support for the IGRA. A bounce off this level could see the index make another into the fierce defence line near 10,250. For this to materialise there would need to be a renewed spurt of bullish momentum in global markets – especially base metals.
April 8th, 2009 at 6:29 pm
Is interesting article.
What are main factors pushing up these stock market?
For example, worl-wide stock markets been rising recently, so is IGRA outperforming them or largely moving in syncronous?
Is IGRA greatly influence by metal prices?
I aprecieate your comments.
April 9th, 2009 at 8:51 am
Traditionally a move in global metals prices – especially copper – has been a key driver of the IGRA. A 34% rally in front-month copper since the beginning of March has perhaps been the main driver of the recent rally in Peruvian stocks. However, it is hard to ignore the bounce in global equities over the past few weeks (arguably in part supported by the rise in commodities), which has allowed for a return of investor risk appetite to emerging markets. Also, keep in mind that the IGRA comes from a very low base at this stage and due to its high correlation to base metal prices, stood to gain more than perhaps most other stock markets during the latest bounce in global markets.