With heightened speculation about an upcoming infrastructure-focused stimulus package, many active traders are readying a shortlist of assets that could be poised to benefit. In the paragraphs below, we'll take a closer look at a few specific charts from across the sector that could be worthy of closer examination.
iShares U.S. Infrastructure ETF (IFRA)
Active traders who are looking to get an overall sense of where infrastructure stocks are headed often turn to niche exchange-traded funds (ETF) such as the iShares U.S. Infrastructure ETF (IFRA). As you can see from the chart below, the infrastructure sector has rebounded sharply from the March lows in a fashion that is nearly identical to all other sectors across the U.S. financial markets. What is particularly interesting at this stage is the speculation of a $1 trillion stimulus package that would supposedly be geared toward assets such as roads, bridges, and communication infrastructure.
You'll notice that the spike in volume and sudden buying interest has acted as enough of a catalyst to briefly send the price of INFA above the influential 200-day moving average. Depending on risk tolerance, some bullish traders may want to remain on the sidelines and wait until they see several consecutive closes above $25.37 because this would likely be the technical signal that indicates a true shift in the underlying trend. Other traders may choose to enter as close to the 200-day moving average as possible in anticipation of a breakout should the details of a stimulus be revealed over the days or weeks ahead.
EnLink Midstream, LLC (ENLC)
While most attention is being given to segments of infrastructure such as the ones mentioned above, another area that could be worth a closer look is energy-related infrastructure. Taking a look at the chart of EnLink Midstream, LLC (ENLC), which is top holding of the IFRA ETF, you can see that the price has recently broken above an extremely influential trendline.
The close above the trendline and subsequent retest of the newfound support suggest that the bulls are now in control of the momentum and that this could be the early stage of a long-term uptrend. From a risk-management perspective, stop-loss orders will most likely be placed below the dotted trendline or a nearby moving average in order to protect against any sudden shift in sentiment or fundamentals.
Antero Midstream Corporation (AM)
Another top holding of the IFRA that is catching the attention of active traders is Antero Midstream Corporation (AM). As you can see from the chart below, the price has bounced sharply from the March lows and has recently closed above the combined resistance of its 200-day moving average and descending trendline.
The recent bounce from $4.85 confirms that the bulls are now in control of the momentum and that the price is poised to make a move higher. Stop-losses will most likely be placed below $4.85 or $4.26, depending on risk tolerance and investment horizon.
The Bottom Line
Infrastructure stocks were in the spotlight early this week on speculation of an infrastructure-related stimulus package that could be announced by President Trump. As we discussed above, recent price action and nearby support levels suggest that the segment could be in the early stages of a long-term uptrend.
At the time of writing, Casey Murphy did not own a position in any of the assets mentioned.