Companhia Sanea (SBS)

[flatlander_60048]

Expect a strong open on Tuesday if today's strength in Sao Paulo holds. SBS is up more than 5% on this MLK day. More importantly SBS is showing considerable strength on the local exchange the past week (see graph).

http://quotes2.enfoque.com.br/sabesp/flash/pt/index.asp

The ADR weakness looks to be solely a result of currency fluctuations. Given the market weakness in the S&P and the speculation that it is forecasting a recession, potential exists that the dollar may weaken in the near future. If that happens SBS should rally and avoid another visit into the 3's.

FL