Why You Should Watch Transportation (IYT) and Retail (XRT) Monday

The market has stopped the bleeding with a rally into Friday’s close. The Small Caps index Russell 2000 (IWM) held over its 50-day moving average of 213.40. Additionally, the retail (XRT) and transportation (IYT) sectors never broke under their 50-DMAs, with IYT going on to clear its prior days 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 index, Nasdaq 100 (QQQ). The QQQs, along with the semiconductors ETF (SMH) have taken a hit, but could make a rebound if Friday’s rally carries over into Monday.

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 Monday’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.

With the rising yields, the market has tumbled. What will do better in a rising yield environment, and how will we know what/when to buy? In this week’s edition of StockCharts TV’s Mish’s Market Minute, Mish takes you through the indexes, key sectors, and some of her top picks.

  • S&P 500 (SPY): Like this to stay over the 50-DMA at 381.17
  • Russell 2000 (IWM): Holding over the 50-DMA at 213.40
  • Dow (DIA): Cleared the 10-DMA at 314.11
  • Nasdaq (QQQ): Held support of 297.46 almost perfectly
  • KRE (Regional Banks): Holding the 10-DMA at 66.05
  • SMH (Semiconductors): Watching to clear 50-DMA at 235.06
  • IYT (Transportation): Highs 241.36 to clear
  • IBB (Biotechnology): Briefly touch main support of the 200-DMA at 143.25
  • XRT (Retail): 85.69 resistance. 75.05 support

Mish Schneider


Director of Trading Research and Education

Forrest Crist-Ruiz


Assistant Director of Trading Research and Education