The Israel-Hamas war continued to escalate over the weekend and on Monday, the Israel Defense Forces (IDF) launched fresh airstrikes in Gaza, while heeding advice from the Joe Biden Administration to hold off on a ground invasion.
Like with all modern wars, including the ongoing Ukraine-Russia conflict, the space industry, which is essential for communication, navigation and imaging is thrown into focus.
Looking back, the importance of satellites, in particular, was demonstrated when Tesla, Inc (NASDAQ: TSLA) CEO Elon Musk agreed to provide SpaceX Starlink devices to Ukraine, which undoubtedly changed the path of the war, especially for Ukrainians, who depend on the internet for information.
With the Israel-Hamas conflict ongoing and key infrastructure in the area under attack, companies in the space industry will remain at a heightened level of importance.
Investing in the space industry can be done on an individual basis or through thematic funds like ProcureAM's Space ETF (NASDAQ: UFO).
The space economy has become heavily commercial as companies expand into the skies to provide services -from the internet to space tourism.
UFO invests in companies powering the space sector, some of whom are directly involved in the current crisis in the Middle East. Planet Labs PBC (NYSE: PL), for instance, has helped provide high-quality imaging to news organizations and governments involved, and Globalstar, Inc (NASDAQ: GSAT), has helped power satellite communications.
The UFO Chart: UFO has been trading in a downtrend since Aug. 10, making a series of lower highs and lower lows. The most recent lower high was formed on Oct. 17 at $16.31 and the most recent lower low was printed at the $15.32 mark on Monday.
- The downtrend has taken shape between two parallel trend lines, which indicates UFO is trading in a falling channel pattern. The pattern leans bearish for the short term but can be very bullish if a stock or ETF breaks up from the upper descending trend line on higher-than-average volume.
- On Monday, UFO was working to print a hammer candlestick, which indicates higher prices may come on Tuesday. Bullish traders want to see the stock bust up through the upper trend line, while bearish traders want to see another rejection at that area.
- A reversal, perhaps for the longer term, is likely on the horizon because UFO has developed strong bullish divergence on the daily chart. Bullish divergence occurs when a stock or ETF makes a series of lower lows but its relative strength index makes a series of higher lows.
- UFO has resistance above at $16.14 and at $17.74 and support below at $14.21 and at the psychologically important $14 mark.