The rising popularity of exchange-traded funds has opened up the ability for retail investors to easily invest in niche market segments such as data and infrastructure. In today's tech-focused world, reliance on businesses that generate majority of their revenue from real estate operations in the data and infrastructure sector is strong, and it will likely continue to grow over the decades to come. In this article, we'll take a look at a few charts from across the sector and try to determine how some may look to position themselves for a continued uptrend.
Pacer Benchmark Data & Infrastructure Real Estate Sector ETF (SRVR)
A small and relatively under-followed ETF that is used by active traders for analyzing movements of the data and infrastructure real estate sector is the Pacer Benchmark Data & Infrastructure Real Estate Sector ETF (SRVR). Taking a look at the chart below, you can see that the bulls have sent the price above a key level of resistance on rising levels of volume. The price action over the past couple of trading sessions (shown by the blue circle) suggests that the bulls are in control of the momentum.
Since the fund is relatively new to the market, you can see that there are now just enough data points to form the 200-day moving average. The bullish crossover between the 50-day and 200-day moving averages at $25.43 is a technical sign of the beginning of a long-term uptrend, and followers of technical analysis could use this level as a guide for placing stop-loss orders. Other traders who are more risk averse may want to set their stop-losses near the swing low at $26 shown by the short-term trendline.
Equinix, Inc. (EQIX)
One of the market leaders in the real estate sector related to data and infrastructure is Equinix, Inc. (EQIX). With a market cap of nearly $37 billion, there are few other players that offer the breadth of services related to connecting businesses with cloud strategies via major interconnected data centers.
Taking a look at the chart below, you can see that the bulls sent the price above a key trendline earlier in the week, shown by the blue circle. The bullish price action clearly shows that the bulls are in control of the momentum, and many active traders will likely set their target prices near the 2017 highs around $480. From a risk management perspective, stop-loss orders will most likely be placed below $404.15 in case of a sudden shift in sentiment.
American Tower Corporation (AMT)
American Tower Corporation (AMT) is the largest holding of the SRVR ETF, with a weighting of nearly 16%. With a market cap of $82 billion, it is also looked to as a barometer for the sector and provides targeted exposure to approximately 171,000 communication sites.
Taking a look at the chart below, you can see that the stock is trading within one of the strongest uptrends found anywhere in the public markets, with little signs of slowing down any time soon. Active traders who following mean reversion theory may want to wait for a pullback toward the support of the 50-day moving average. Buying on weakness has proven to be a reliable strategy for followers of American Tower over the past few years and will likely be the go-to strategy moving forward.
The Bottom Line
The reliance on real estate related to data and infrastructure makes SRVR an interesting ETF to add to any trader's watchlist. Furthermore, while the SRVR fund is under-followed, the chart patterns discussed above suggest that the sector is worth a closer look, and some of the top holdings such as Equinix and American Tower could be a good place to start.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.