Mexican Markets

12/21/12 02:39PM EST

We don’t think it’s a good time to short Mexican equities right now despite financial markets being “priced to perfection.” The Mexican economy’s underlying fundamentals are vulnerable to cyclical erosion in the first quarter of 2013 and the stock market may pull back to some degree, but anticipate any weakness to be reasonably well-contained with respect to the intermediate-term TREND duration (3 months or more). As you can see in the chart below, the Dow Jones Mexico Stock Index is above our TREND and TAIL lines of support and has held above our TRADE line of resistance. We think stocks will continue to work well in Mexico's financial markets as long as there are no political hiccups that get in the way.

Mexican Markets - mexico1

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