What could a fork in the road mean for the market outlook?

In this article, Mish Schneider, director of trading research and education at MarketGauge.com, explores the signs coming from the markets, and predicts what the day’s action will determine.

The market has stopped the bleeding with a rally into Friday’s close.

The small caps iShares Russell 2000 ETF [IWM] held over its 50-day moving average (DMA) of $213.40.

Additionally, the SPDR S&P Retail ETF [XRT] and iShares Transportation Average ETF [IYT] sectors never broke below their 50-DMAs, with IYT going on to clear its prior day’s high.

This is key, as both sectors are closely tied to the economic recovery.

If they continue their upward trend, this will show that investors are expecting brick-and-mortar stores to increase sales along with a push for more travel.

Texas is especially ready for its economy to return to normal, with its recent mask mandate lift.

Friday’s jobs report also gave a boost by showing a gain of 379,000 payrolls in February.

Currently, all the major indices are holding up except the tech heavy Nasdaq 100 index (Invesco QQQ ETF [QQQ]).

The QQQ and the VanEck Semiconductors ETF [SMH] have taken a hit, but could make a rebound if Friday’s rally carries over into today.

In the recent months, we have seen sectors and indices dip under support from the 50-DMA only to clear back over and continue higher.

Therefore, if today’s price action continues upwards, watch for SMH and QQQ to follow or consolidate.

On the other hand, if Monday’s price action takes a turn lower, watch IYT along with XRT to hold support of their 50-DMA.

This article was originally published on MarketGauge. With over 100 years of combined market experience, MarketGauge's experts provide strategic information to help you achieve your investing goals.