Back on March 8, when the S&P Industrial SPDR ETF (XLI) was trading at 95.88, this is what we discussed about XLI, recalls Mike Paulenoff of MPTrader.
"In addition to the Materials SPDR (XLB), 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 31, President Biden 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 two to three quarters of booming domestic growth?
The XLI is currently trading right at 100, en route to my next immediate target of 101, but with an outlier target zone of 104-106. Key support on any forthcoming weakness resides at 96.60-97.00.
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.