The 50 sec. video below shows very well the sequence of events:
YouTube - Esquadrilha da Fumaça - Acidente em Lages (SC) 02/04/2010
The plane comes in a shallow dive performing 3 rolls, makes a low pass and climbs with a gentle roll to the right. At the top he is inverted, the smoke stops, then abruptly rolls to the left. Maybe, some kind of mechanical failure has caused this. The pilot appears to be struggling to regain attitude, but doesn't have enough altitude.
The smoke system in these planes uses a small reservoir that injects oil on the engine hot exhaust to create the smoke effect. The fact that the smoke has stopped may indicate engine failure?