Trading on technicals in sectors like tech, retail, biotech

Second-quarter earnings season has brought to light different signals about where each market sector is heading. The retail sector (XRT) and tech sector (XLK) being among the spaces that saw a mixed bag of results from its top players.

MarketGauge.com chief strategist Michele Schneider joins Market Domination to give insight into what investors need to know about the current market environment following earnings, underlining how best to trade on technicals from each of these industries.

Schneider explains the consumer play as retailers deliver winning or lagging quarterly results amid price-conscious shoppers, while the retail sector is "very close to a major breakout."

Turning to tech, Schneider details hidden opportunities to watch and how investors should be "treading water." She names Eli Lilly (LLY) as one other stock that is "treading water" but in a different manner than tech. Eli Lilly could potentially see $150 to $200 more in this stock coming up, Schneider says.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Ivana Freitas.

Video transcript

Joining us.

Now, we've got Michelle Schneider Market gauge dot com's Chief Strategist Michelle.

It is great to have you on with us.

Thank you so much for joining us here.

I, I do want to start just on consumer discretionary because this has been a fascinating signal of where the consumer is heading in the broader economy.

Of course, uh If we look at the consumer discretionary index of the S and P, it is up over the last month, but well below all time highs of the year, what's gonna get it back?

Well, I'm really keen on, first of all, lowering interest rates will help obviously.

Um and secondly, I think that we're seeing some trends emerge, don't forget we're coming out of COVID in a very high inflation where people at first were spending money everywhere because they were just so excited to be out and about after being locked down.

And now I think what's happening is the consumer is shifting to more of the staples even though inflation is technically down, we know prices are still very high depending on what it is you're shopping for.

And I do believe though that this sort of we, to me, consumer mindset will be continuing a trend as we get into 2025 a lot of it having to do with the obesity drugs, uh not only from the standpoint of people getting thin and staying thin and what that will do in terms of their habits.

But even from a health perspective, all the stats that have come out lately about how it's helping diabetes and heart disease.

Michelle.

Let's talk, let's talk.

Uh some technicals.

Now, you know, we did have a, a few retail names reporting this week.

Of course, I'm interested when you look at the uh X RT.

So the retail ETF Michelle, what do you see in the charts?

Well, just to give you a little bit of uh why we're picking X RT is because, um I consider obviously the consumer, we're a consumer economy.

This ETF houses a lot of different types of stocks from consumer staples to consumer discretionary.

So it gives you a good blended look at what the state of the consumer is in terms of the market.

And right now, it actually is whole up pretty darn well, considering some of the dismal earnings we saw this week, like with Dollar General.

Um, this is on the 50 day moving average, considering how many times the market has looked shaky, it's held up above that.

It's very, very close to a major breakout.

And when I say a major breakout, it would be over the 2024 highs at about 80.

So if we clear 80 I think this is just one of those things is where you kind of hold your nose.

And by because it is such a major breakout and it gives you a sense of optimism that you may not necessarily see from listening to the economic stats.

Um, if it breaks down though, under say 75 maybe I get a little more cautious.

Uh And of course, then we would be looking at the seasonality of it, uh maybe a slow down, but I think it's gonna pick up ultimately around the Christmas holidays, of course.

And then as, as I said, as we're getting into 2025 I love the hold your nose reference Michelle.

And I'm curious if you think that that applies to tech as well.

We've got your 50 day moving average on the XL K tech ETF coming up on screen here.

What do you think is going to be the next catalyst for the tech space particularly given the streets reaction to those in video earnings?

Well, I, you know, the, the, the interesting thing about tech is that you sort of had your hold your nose moment at the beginning of this year, right?

So now it's more treading water if we're gonna continue our swimming analogy here.

Um So as treading water, we have to ask, does that necessarily mean bearish or bullish and basically treading water means just that it's not really, I think slated to make new highs anytime soon.

There's been a lot of chatter about rotation and we're starting to see it, although not at any great degree, seasonally, of course, we're going into maybe a little bit of a slowdown although election season sometimes cancel that.

So getting back to deck Tech, I mean, NVIDIA obviously muted reaction but holding some key level here at around 118, I'm looking at tech back more into believe it or not the EV space and things that have to do with evs like batteries that has been so beat up.

It's still considered to be tech and actually also could make a nice comeback as we get into the end of this year and into next year.

So that's where my eyes are on more on the EV uh area Michelle.

I I wanna get your take on another name too.

We were actually just talking about Novavax which um moving on headlines here gets us FDA authorization for an updated COVID-19 vaccine.

I wanna get your take though on, on a peer there, Eli Lilly.

When you look at the charts, what do you see?

Well, it's had a massive consolidation near the highs.

So another one that's treading water but at a different chart position than say the tech which is under the 50 this is over the 50 it's just about to take out what we like to use from a standpoint of a six month calendar range.

So the July highs, once it takes that out, generally, that means it's going much stronger looking at the chart that you have there, you can see sort of what we call an inverted head and shoulders bottom, which means if you drew the neck line across those highs there, we take that out sometimes what you would like to do is use the measured move of where the head would be to the shoulders.

That would be a pretty massive move there.

You could easily see maybe 100 and 50 to $200 more uh in this stock coming up, Michelle.

Great to have you on the show.

Thank you for that.

Enjoy the weekend.

Same to you.

Thank you so much for having me.