Profiting On An Infrastructure Spending Play

by Mike Paulenoff
April 4, 2021 • 1:06 PM EDT
On March 8th, when XLI was trading at 95.88, this is what Mike Paulenoff discussed with our MPTrader Members about the S&P Industrial SPDR ETF:
"In addition to the XLB (Materials SPDR), another vehicle (arguably a better one) to ride the infrastructure spending narrative, is via the XLI Industrial ETF. The technical set up is extremely powerful, as the price structure rockets off of last week's dip into strong support at the 50 DMA and at the March 2020 up trendline. If XLI is heading to the upper boundary line of its March 2020 bullish price channel, then the target is 103-104. Only a sharp decline that violates presumably very strong support from 90 down to 87, will wreck the set up."
Last Wednesday, March 31st, with XLI trading at 99.16, Mike posted the following update in our Discussion Room:
"On the day of President Biden's speech to unveil the infrastructure bill, we find XLI trading above 99.00 (the intraday high is 99.18 so far), in route to my next immediate target of 101, but with an outlier target zone of 104-106 (see my attached chart). Key support on any forthcoming weakness resides at 96.60-97.00."
President Biden subsequently proposed a $2.25 trillion infrastructure spending plan that some strategists on The Street are comparing to the 1950's explosion in building-- and repair-- of roads, highways, bridges, tunnels, airports, bus and train terminals, et al.
What's next for the XLI, especially considering the Industrial SPDR ETF is up 107% off of its March 2020 low? Will pent up demand for "value stocks" continue in any case? Will interest rates and inflation remain contained to facilitate another 2 to 3 quarters of booming domestic growth?
Join Mike and our MPTrader Members as they discuss and navigate the forthcoming exciting or disappointing prospects for the infrastructure rollout and rebuild, as well as many other names, sectors, ETFs, macro indices, and commodities in Mikes diary throughout every trading day.
Mike Paulenoff is the author of MPTrader.com, a real-time diary of his technical analysis & trade alerts on
ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international
markets, plus key ETF component stocks in sectors like technology, mining, and banking.
Sign up for a Free 7-day Trial!
More Top Calls From Mike
Never a dull moment since January 20, 2025! This weekend, POTUS imposed 25% tariffs on Mexico and Canada, and 10% on China, which go into effect on Tuesday. From an initial market perspective, tariff trade war fears have triggered a risk-off reaction from Bitcoin-- the only highly liquid weekend market that can give us insight into what to expect for Sunday evening and Monday morning trading.
On December 27, 2024, with META trading at 595.26, this is what I posted to the MPTrader Discussion Room in response to a member's question:My pattern work from the October 2023 low at 279.40 to the December 2024 ATH at 638.40 (+128%) tells me that META is at a technical crossroad now... META's most recent upleg from the 11/19/24 low at 547.71 to the 12/11/24 ATH at 638.40 has the "right look" of a completed advance.
At the close of trading on December 18, 2024, this was my final thought posted to our discussion room at MPTrader.com:ES (March 2024 E-mini SP 500)-- Stating the obvious: Today's reaction to the FOMC Rate CUT (!!) inflicted serious near-term technical damage to the dominant, post-August uptrend... Last 5960.75...Thirty minutes after the close on December 18, 2024, I followed up with this commentary for MPTraders:My preliminary "conclusion" about today's outsized 3.
On December 20, 2024, this is what we discussed about the relentless four-week correction from NVDA's ATH at 152.89 (11/21/24) to a low at 126.35 on 12/20/24:Three Times is a Charm? For the third time this week, NVDA spiked down into the lower reaches of my optimal corrective target window from 132 to 125-- this AM representing the latest spike low at 126.35-- and for the third time, buyers emerged, propelling NVDA higher to 130-132. As we speak, NVDA is trading at 131.
On December 13, 2024, with NVDA trading at 132.54, down 13.3% from its All-Time High at 152.89 (11/21/24), and bearing down on a critical 8-week support plateau at 131-132, this is what I posted to MPTraders:NVDA Update: Approaching key support in the vicinity of 132 that if violated and sustained, could unleash the downside potential derived from a two-month top formation (everyone sees the Head and Shoulders formation by now).