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Mish Schneider 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.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

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