Market strategist: Consumer staples are ‘one of the safer places to park your money’

Michele Schneider, Marketgauge.com Partner and Director of Trading Research & Education, joins Yahoo Finance Live to talk about the pressures small-cap companies are experiencing, the consumer staples sector, Walmart, and gold prices.

Video transcript

BRIAN CHEUNG: Welcome back to Yahoo Finance Live again. Markets in focus as the markets continue to be in the red, but not as deeply as they were earlier today. We are seeing the Dow down about 8/10 of a percent. The S&P 500 down 1%, and the NASDAQ down 1.6%.

But really, a lot of the volatility that we've seen this week has also been in the fixed-income space. When you take a look at the US 10-year yield, down pretty markedly, down 11 basis points to 1.73%. Keep in mind that we were at about 1.85% yesterday, and, in fact, the levels that we have seen today, we haven't seen since, well, Monday. So it's been a very big up-and-down, rocky road over the course of this week for fixed-income markets. We'll see what that bodes as we get closer and closer to that Federal Reserve meeting on March 16.

But let's take a deeper dive into the markets. And for that, we've got Yahoo Finance's Jared Blikre in our "Getting Technical" segment, and he's got a special guest joining us today to break down the graphs. Jared?

JARED BLIKRE: That's right. We got Michele Schneider of marketgauge.com, also a partner and director of Trading Research and Education there. And Mish, we gotta start with the general market. I'm going to pull up IWM. That's the iShares Russell 2000 ETF, and it's been pretty choppy lately. And if we go to a chart, I just want to kind of plot the week's price action.

You can see a little bit of up and down there. But also, when you go back three years-- and I go back three years because I want to catch the pandemic low-- you notice that it's been trading sideways in a range with a little bit of an oops to the upside. But now maybe we're in a new range. What do you-- what are you seeing in this chart?

MICHELE SCHNEIDER: I'd say that's exactly right, Jared. This has been a very range-bound instrument for a while, and it makes sense fundamentally because after COVID, we're still seeing some comeback in the manufacturing and industrial side of the economy. And that's why the IWM is so important to watch.

So right now, we got that 188 to 190 level. It was the low in the early part of 2021, and now it's been the low twice here in 2022. So we're bouncing from that, but we can't seem to get back over key moving averages like the 50-day moving average, for example, which is coming in at around 207. So really, we have a range and with a lot of chop in between. So if it breaks 188, we'll probably see something like 175 next. We can get through 207. Maybe we can go back up to 220, but I wouldn't necessarily say new highs or necessarily new lows, range-bound, which is very much a part of stagflation.

JARED BLIKRE: Yeah, and we can play the range, too, if you're a trader. But I want to move on to a-- a sector that doesn't always get a lot of attention but is important nonetheless. That's consumer staples, as you can see on your screen. I'm going to take out the moving average, and let's go back and take a three-year view of this as well because this has been in a steady, steady uptrend for more than a year. It looks like, going back two years to that pandemic low, that we're about to lap on the two-year basis. What are you seeing in here? And then we can also move on to Walmart whenever you're ready.

MICHELE SCHNEIDER: Well, XLP is definitely where you want to be and in stagflation times because it's consumer staples, exactly that, people buying what they need. And so XLP right now, the chart, I think is very, very strong, still needs a little bit more work. I want to see it get through 75.90, 76. That's where we'll enter. And of course, on the downside, you want to see it hold about 72.50, but I think that that can be a continuing trend because it's probably one of the safer places to park your money right now.

JARED BLIKRE: And then one of the biggest consumer staples of them all-- big-box retailer Walmart. This is another instrument that has been choppy. I'll pull back to three years. And you can see, basically, you've been going sideways for a year and a half. Any kind of consolidation, or what do you want to see happen in Walmart?

MICHELE SCHNEIDER: Well, Walmart's having a nice move as we're speaking today, but again, it stopped just short of a major moving average. So we want to see it get through the 200-day moving average. It's cleared the 50, but it looks like a nice basis forming. Again, as far as consumer staples, a stagflation environment, Walmart not only obviously is discounted but is also getting into the medical space, which I think is an area to be looking at as well. So it's reflecting the fact that it could actually grow in that arena.

JARED BLIKRE: All right, we got time for GLD, gold. Gold has been on the move. Can you handle this in one minute or less? I like the bullishness of this chart.

MICHELE SCHNEIDER: OK, one minute or less. One, momentum-- the momentum is skyrocketing here. Two, it was incredibly undervalued compared to the equities for years, and now it's finally playing catch-up. Three, it's a geopolitical and inflation hedge. And four, right now, the way the chart is looking, it looks like, if we just take a look at GLD alone, we have an opportunity now to see it go up to about 186, 187, if it holds 179. And then through there, we have the 2020 high at 194-ish.

JARED BLIKRE: Got it. Really appreciate your insights here, as always, Mish Schneider, marketgauge.com partner. Sending it back to you guys.

BRIAN CHEUNG: Finance Jared Blikre, thanks so much for bringing us that conversation. Coming up on the other--