XLI Observations

Since I was traveling I didn't enter any new contracts. Although I mentioned that XLI was going to be my next trade.

I've been observing XLI over the last week and a half. I wanted to understand its behavior and determine a channel. In the below, you'll find that defined channel I set, plus a highlight of March 2, 2026 – where the high was $179.31 and from that moment it retreated back into the channel.

What's happened? during the State of the Union (SOTU), the president was adamant about pushing for AI infrastructures and mentioned that he would facilitate the requirements that come with building more AI. Initially, technology stocks and ETFs surged, while XLI remained steady. However, with building new AI centers, it means that there will be construction involved, therefore the industrial sector benefits from this.

In addition to the above, the reason XLI jumped on March 2, 2026 is partially due to the ISM Manufacturing PMI, which was at 52% indicating expansion. For this reason, many investors jumped in. This jump was short lived, as we see, it immediately dropped down to the original set support of $172.

Now, I decided to go in this morning based on what I knew. In addition to this, I followed the strategy I used for XLE based on previous wins analysis. Looking back, before I entered my Delta trade in July last year, we saw the support be slightly tested while maintaining a decent RSI. In addition, I already bought the discount. Again, the high two days ago was $179.31 and it currently sits at $176, for this reason, my contract was cheaper. Let's look at the details:

If we go back to the chart, we can determine that March 2, 2026 was a fake-out day. Today XLI closed at $175.97 which is lower than my original bought in price. The good thing is that we're early in the contract, the RSI is at a healthy mid 40s and the price is within the channel and closer to the resistance price.

I'll monitor this trade from here on while following my plan of getting out if there is a 25% loss or once I've secured profits or initial investments. Similarly to my previous trade, I will be moving my stop loss the closer I get to my strike price or break-even.