It's time to dig, break rocks, and pour cement... In other words, it's infrastructure time. The U.S. Senate voted in favor of the Inflation Reduction Act of 2022 on August 7.
The Power Gauge Spots a New Trend in Infrastructure
By Marc Gerstein, director of research, Chaikin Analytics
It's time to dig, break rocks, and pour cement...
In other words, it's infrastructure time.
The U.S. Senate voted in favor of the Inflation Reduction Act of 2022 on August 7. Then, the House of Representatives approved it Friday. And President Joe Biden will soon sign it into law.
Don't let the name throw you off. This mega-sized bill covers all types of spending.
For example, it earmarks $3 billion specifically for the redesign of community roadways. And it also has billions of dollars set aside for similar projects to explore "low carbon materials."
In many ways, it's an extension of Biden's failed "Build Back Better" framework. And no matter how you feel about that, one thing is clear...
Uncle Sam is about to spend a ton of money in an investable industry.
Today, I want to focus on the law's expected boost for American infrastructure. And as I'll show you, the Power Gauge is pointing to an incredible opportunity in this space...
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Construction and engineering is now second out of 68 industry groups in terms of the Power Bar. In the group, 25 stocks are ranked "bullish" or better. And none rank "bearish."
The Power Gauge also ranks the Global X U.S. Infrastructure Development Fund (PAVE) as "very bullish" today. And its Power Bar currently shows 53 favorably ranked stocks and only six unfavorably ranked.
That's much different from when the Build Back Better Act failed last fall.
Back then, the Power Gauge showed us that two important factors were absent. You can see what I mean in the following chart...
Notice that PAVE's relative strength versus the broad market was lackluster when the Power Gauge turned "bullish" last fall. And the Chaikin Money Flow – our proprietary indicator that tracks the behavior of the so-called "smart money" (institutional investors) – was poor, too.
It also looked like PAVE might present a buying opportunity in the spring, when the Power Gauge flipped to "bullish." But notice that the overall Power Gauge rating and Chaikin Money Flow readings quickly turned against this group.
However, everything is now roaring back to life...
The Chaikin Money Flow indicator shows us that the smart money started pouring money into PAVE again in recent weeks. The relative strength indicator is clearly positive now, too. And the Power Gauge is now firmly in "bullish" territory as well.
Folks, it looks like the next infrastructure boom is upon us. And you'll likely start considering how to put your money to work in this segment in the near future.
With the Power Gauge's help, it's clear that PAVE is a great way to do that today.
Good investing,
Marc Gerstein
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+1.23%
6
21
3
S&P 500
+1.67%
157
277
61
Nasdaq
+1.95%
32
51
17
Small Caps
+2.04%
562
975
310
Bonds
+1.01%
Consumer Discretionary
+2.26%
11
31
16
— According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish.. Major indexes are mixed.
* * * *
Top Movers
Gainers
BR
+7.95%
ON
+7.23%
PENN
+5.90%
GNRC
+5.32%
CAH
+5.03%
Losers
ILMN
-8.40%
EMBC
-4.40%
PKI
-1.90%
CTRA
-1.78%
OGN
-1.34%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
No earnings reporting today.
Earnings Surprises
BR Broadridge Financial Solutions, Inc.
Q4
$2.65
Beat by $0.03
SPB Spectrum Brands Holdings, Inc.
Q3
$0.54
Missed by $-0.88
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+7.38%
Financial
+5.40%
Materials
+5.20%
Communication
+4.33%
Real Estate
+4.16%
Industrials
+3.87%
Discretionary
+3.41%
Utilities
+3.35%
Information Technology
+2.44%
Health Care
+1.65%
Staples
+1.17%
* * * *
Industry Focus
Transportation Services
14
24
10
Over the past 6 months, the Transportation subsector (XTN) has underperformed the S&P 500 by -3.20%. However, its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #13 of 21 subsectors and has moved down 3 slots over the past week.
Top Stocks
MRTN
Marten Transport, Lt
CHRW
C.H. Robinson Worldw
SNDR
Schneider National,
* * * *
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This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
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