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Mish Schneider The transportation sector lends a hand

In this article, Forrest Crist-Ruiz, assistant director of trading research and education at MarketGauge.com, explores the effect that transportation could have on other sectors.

Mish’s economic modern family is made up of five key sectors and one index.

Each member has been specifically chosen to help investors and traders navigate the market by giving an easy way to see emerging trends and important price levels.

The family consists of:

On Friday, IYT broke to new all-time highs. Additionally, IYT holds an important underlying value as it represents the demand side of the market.

If goods are being moved and people are travelling, that bodes well for every other family member.

This is where IBB, XRT, and KRE come in.

All three have pulled back to major moving averages that are often viewed as support levels — XRT and KRE to their 50-day moving averages (DMAs) and IBB to its 200-DMA.

With IYT’s support, we can watch for these sectors to move higher on Monday as they spring off their moving averages.

With that said, while transportation has played its part as a leader, it will need participation from two special family members — the small caps, IWM, and semiconductors, SMH.

On Friday, both were able to rally over their 50-DMAs by the close, which means if both can hold over their MAs, the rest of the family members, along with the overall market, will have a good reason to move upwards on Monday.

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.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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