Benzinga - by Melanie Schaffer, Benzinga Editor.
The Procure Space ETF (NASDAQ: UFO) opened flat Thursday, continuing to consolidate a big break up from a descending channel, which Benzinga pointed out was likely to happen on Oct. 23. The thematic fund, which invests in companies powering the space sector, has gained over 8% since that date.
While news of the commercial space industry is often dominated by Elon Musk’s and Jeff Bezos’ aspirations to open the cosmos to tourism and interplanetary human habitation, the sector is of vital importance to life on Earth. It is relied upon by governments for national and global security, for researching, monitoring and evaluating natural disasters and for national and international communication.
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With the U.S. entering a federal election year in 2024, issues critical to Americans that are driven by industries reliant on companies involved in the space sector are set to take center stage. Voters will be listening carefully to how each candidate plans to tackle issues that exist in healthcare, agriculture, finance and transportation –all of which are industries reliant, in some part, on companies involved in the space sector, through satellites, GPS, wireless communications, telemedicine and surveillance.
While UFO holds a 4.36% weighting of popular retail stock Virgin Galactic Holdings, Inc (NYSE: SPCE), the funds top three holdings are Garmin Ltd (NYSE: GRMN), weighted at 6.33%, Sirius XM Holdings, Inc (NASDAQ: SIRI), weighted at 5.54% and Globestar, Inc (NYSE: GSAT), with a 5.13% weighting within the ETF.
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The UFO Chart: UFO broke up from a descending channel on Nov. 2 and reversed course into a strong uptrend. The most recent higher high was formed on Wednesday at $16.82 and the most recent higher low was printed at the $16.17 mark on Dec. 1.
- On Thursday, UFO was forming an inside bar, with all the price action taking place within Wednesday’s trading range. The pattern leans bullish in this case because the ETF has been trading higher.
- On Nov. 16, UFO’s eight-day exponential moving average (EMA) crossed above the 21-day EMA, which is bullish. Since then, the eight-day EMA has been guiding UFO higher. If the ETF continues to trend upward above the eight-day, UFO will eventually reach the 200-day simple moving average, which is likely to act as strong resistance for at least a short period of time.
- Bullish traders want to see continued consolidation help to lower UFO’s relative strength index, which could give the ETF room to move further north without becoming overbought. Bears want to see big bearish volume come in and knock UFO down under the eight-day EMA, which could accelerate downside pressure at least temporarily.
- UFO has resistance above at $17.74 and at $19.21 and support below at $16.14 and at $15.06.