Industrial (XLI)

By JC Parets Wed, Apr 20, 2022

Hey,

Consumer sentiment is in the toilet. It’s as bad as it’s been in my entire life, rivaling the S&L crisis, or the Death of Equities 40 years ago.

The good news — sentiment has just about nowhere to go but up.

When the worm turns is another matter — which is why I’ve been eyeing some long-term calls on XLI, the industrial sector ETF. Far enough out, sentiment is very likely to be higher than today.

XLI gives you broad exposure to huge swaths of the marketplace. The industrial sector sometimes acts as a grab-bag for everything that doesn’t neatly fit elsewhere. 

It includes everything from manufacturing and materials to logistics and shipping. Owning this broad industrial ETF gives us a great way to capture upticks in the market, wherever they emerge.

My favorite play today is a Jan ‘23 outside-the-money call, at a 130 strike price (currently only 34 cents).

And the reason I like that call so much is because I see XLI breaking out if and when it hits 100, for about a 30% gain.

So you can play the stock and grab the 30%. Or you can buy the calls, for a potential 25-bagger if XLI breaks hits 130 anytime this year.

Til next week, good trading,

JC Parets

About the Author

JC Parets, founder of All Star Charts, specializes in finding the most opportunistic risk vs. reward propositions while at the same time bringing a top/down approach to the marketplace whose wide spectrum is rivaled by few. JC begins with a long-term global macro perspective and then works his way down to the individual sector and industry level before ultimately isolating the stocks that best portray a particular thesis. Price is the most important technical indicator, but JC uses supplements such as Momentum, Relative Strength, and Fibonacci analysis to complete the process.