Action following the Presidential Election in Brazil has brought notable near-term technical damage to the broader Latin American space.

Brazilian and Latin American equities dropped on Monday (10/26) for the worst day since March 2020 after the surprise reelection of President Luiz Inacio Lula da Silva to a fourth term. The surprise comes after Brazilian and Latin American equities had rallied in recent weeks thinking Senator Flavio Bolsonaro (the son of former President Jair Bolsonaro) was the top candidate after the opening round of Brazil’s presidential elections earlier this month. While Bolsonaro’s approach to tighter fiscal policy had given markets a boost, Lula’s reelection brought concerns about rising debt and the new administration’s fiscal approach to lower borrowing costs. Though the Lula administration has pointed to a repositioning by investors for cause of the recent deterioration and that the fundamental picture remains sound, the damage to the technical picture for Brazil and broader Latin America in the near-term has been significant.

Following trading on 10/29, international equities fell below domestic equities within our longer-term to move into second within the NDW DALI Asset Class Rankings. Much of the responsibility for the change comes from the abrupt deterioration within Brazil and broader Latin America impacting the asset class ranks in DALI and the Asset Class Group Scores. Though the longer-term rankings within the NDW DALI International Equity Rankings still have Latin America sitting in first, it is worth bearing in mind that many Latin American representatives saw relative strength (RS) charts reverse into Os earlier this week and bring RS charts to within a box or two of a potential RS sell. Additional downside from here can push the RS charts to see the signal switch to sell, and with the multitude residing near the cusp, a potential change in Latin America’s ranking could be in the offing. On the Asset Class Group Scores page, which averages the fund scores of all ETFs and mutual funds on the NDW platform, the Latin American group fell down from 4.25 as of 10/23 down to 2.02 as of 10/29. This marks the lowest group score level since April 2025 and brings the group down to rank low within the Non-US View on the ACGS page with the likes of international equity income related groups, India, and China.

The technical picture for the iShares MSCI Brazil ETF (EWZ) offers a view of recent action within Brazilian equities. After seeing a second buy signal and trend reversal earlier in October, EWZ moved to within a couple boxes of its all-time chart high in the low $40s. Following the announcement of the Lula’s reelection on Monday (10/26), EWZ fell from $43 to $31.50 intraday Monday (10/26), marking the lowest level since January this year. Though a brief reversal ensued on 10/27, Wednesday’s (10/28) trading brought the chart back into Os, marking another lower top since the recent peak. The 19% drop on 10/26 brought the market and peer relative strength charts back into Os, highlighting near-term underperformance, while the continued negative action Wednesday (10/28) brought the market RS chart to within one box of an RS sell signal. Along with seeing action on the market and peer RS charts, EWZ moved to an RS sell signal against the NDW U.S. Money Market (MNYMKT) proxy following Wednesday’s (10/28) trading. EWZ has now fallen to its most oversold level since December 2024, and the ETF’s fund score has dropped to its lowest level since August 2026.

Within broader Latin America, the only remaining country to still maintain a positive overall technical picture is Colombia with the Global X MSCI Colombia ETF (COLO) holding a 5.77 fund score (out of 6), though the fund did give a second sell signal following news of the surprise election in Brazil. Peru, through the iShares MSCI Peru and Global Exposure (EPU), witnessed a third sell signal prior to the Brazilian elections, while Chile and Argentina, by way of the iShares MSCI Chile ETF (ECH) and Global X MSCI Argentina ETF (ARGT), violated notable long-term support, marking their lowest levels since October 2025. Broadly speaking, the iShares S&P Latin America 40 ETF (ILF) witnessed a shift into a negative trend and fell down to support at $32.50 on 10/26. Like EWZ, ILF reversed down into Os on the market and peer RS charts following action on 10/26 and now sits within one box of a potential market RS sell signal. Along with seeing action on the market and peer RS charts, ILF moved to an RS sell signal against the NDW U.S. Money Market (MNYMKT) proxy following Thursday’s (10/29) trading.

Brazil’s election has clearly caused enough concern for investors to impact the technical picture of the country and the broader region in the near-term. At the moment, the deterioration within Latin America has brought about a potential leadership change within the broader international equity space. Broadly speaking, with domestic and international equities still maintaining the top two spots and commodities sitting in third, DALI still maintains a risk-on posture. Though as has been highlighted, the rotation of a region or sector within the market out of a leadership position can cause impacts elsewhere in the longer-term rankings. Bear in mind, NDW users can set alerts for not only price or chart action on trend charts, but for action on relative strength charts, as well as changes to the NDW DALI Rankings and Asset Class Group Scores page in order to stay abreast to potential changes.