The iShares MSCI Brazil Index ETF (EWZ) is probably coming down.
It has already fallen from its 52 week high of 80.93 (reached in January) to 68.3 (with a fall of -1.7 % just yesterday).
However, it is still probably over-valued, for several reasons:
a) the Brazilian real is over-valued.
b) Emerging Market stock indices are over-valued in general, including Brazil's (the EEM Emerging Markets index ETF is down from 46.66 to 40.65 in the same period).
c) Many commodities that Brazil exports are over-valued (including agricultural and mineral products), and will probably fall in price given China's slowdown.
d) the Brazilian economy is slowing down, posting a negative growth (or fall) of -1.0 % in industrial production in June 2010 (the third consecutive fall).
e) Lula's handpicked successor, Dilma Rousseff, is gaining in the polls, and may prove to be more populist than Lula (particularly in economic policy).
Other than shorting EWZ, another way to benefit from this fall would be to buy ProShares Ultrashort MSCI Brazil (BZQ).
UPDATE: As of December 12, 2013, the iShares MSCI Brazil Index ETF (EWZ) has fallen to 43.8 (that is, almost half its level of January 2010). Almost all of the factors I mentioned in this 2010 post have come to pass, except that Dilma Rousseff actually has run a tighter policy than Lula. The HSBC Brazil Purchasing Managers’ Index (PMI) has slipped into contractionary territory. On the other hand, the Brazilian stock market seems to have been pummeled enough, and might be ready for a correction.