Michele Schneider, Partner and Director of Trading Research & Education for MarketGauge.com, says that despite Tuesday's gains, investors should be really careful with how they're investing and what they're investing in given the recent volatility on Wall Street.

Closing Bell

Stocks Close Near Session Highs as Investors Target Bargain Buys

joining me now is Michelle Schneider partner and director of trading research and education from market gauge dot com Michelle. It's good to see you this afternoon stocks clearly in rally mode today. Do you see bargains out there in the stock market? I think there are in some areas actually areas that are commodity based because there was a huge correction coming into this week, particularly in some of the soft commodities and even in some of the grains and so and and in some of the industrial metals. So those things performed today and they have some good relative risk as far as the equities themselves really. We don't really know what value is yet. And I think that's the biggest problem if we just look at the tech sector, are we at the proper valuation? Well considering what we heard today from Powell, if the rates have to go up higher, That should hurt the tech stocks. So I think you have to be really careful not only in what you invest in, but how you invest. Are you looking for a passive investment because you think, Oh, I can sit through another 10-20% downturn is not going to go much lower than that? Or do you want a more kind of follow these extreme lows where the bind comes in and then take profits when you get a good rally like we're seeing now, are there certain stocks that you like Michelle and in the tech sector as a whole does look a little bit risky right now, knowing that rates are likely to rise quite aggressively from here. But individual names like Apple amazon, others that you see as attractive. Well interestingly enough, we're looking at some of the ones that have fallen really hard, like square for example, they all have very similar techniques, technical patterns on the charts. If you take a look, they've all sold off tremendously. And now we're looking like a little bit of a V bottom some consolidation at these higher levels but well under their moving averages. So I like square in terms of some of the more constructive charts I like tech, which is coal based. I'm still looking at this point at sugar. You can look at it through Kane. Um we we bought china actually, I think some of the chinese stocks are probably worth the best. Look even some of those chinese tech stocks because a lot of that restriction that was put on by President Xi Now talk of them actually starting to reduce those restrictions, not to mention the fact that shanghai was on complete lockdown and now that could open up. So again, you want to pick very carefully if you want to look at the indices and guide what you're doing based on whether or not they can hold these current lows and you want to look at high yield, high risk junk bonds which are certainly not participating in this rally at all. Another question that I have for you is the NASDAQ clearly in bear market territory down worse than 20% from its recent high back in november. But the S. And P. At least up until this point has avoided a bear market. Do you think we could see a bear market on the S. And P. This year? Oh absolutely. It's possible. We have listened to what we've got going on here. I mean there's so much confusion on one level. People said, oh so much money came out of the market and we do have a record a month of cash on the sidelines, The statistics that came out today was at the levels of 9 11. But on the other hand, If you look at like the financial crisis of 2008 when 92% of the stocks went to one year lows right now we only have 30% of the S. And P. Stocks at one year low. So we held a really good support. If you look at the spx at 3800 were bouncing from there, maybe we get a little more bounce. But if we break down under that 3800, then I think That 20% rule, which is just one way to look at a bear market will certainly confirm that we have much lower to go. We'll be in the bear market for some people who have a time horizon of two years, three years, maybe four or five years, they're considering retirement in the years ahead and or they want to take their money that they've invested in the stock market and buy a home, for instance, for someone who has that kind of time horizon, what should they be prepared for if we do reach a bear market? How long do you think this depressed environment could last in the stock market? Well, we've already advised our clients, particularly the ones that are in the baby boomer segment, to sell a lot of the growth stocks that they had in their portfolio like two months ago. So hopefully people were able to get out of some of those heavy hitters at much higher prices. And if they hadn't, I would say at this point now, if we start to see another leg lower and you can protect profits in those big growth areas and you should do that in terms of what's interesting is if the interest rates actually go up the cash in the bank may not be the worst place to look at. And if you're on a fixed income, yes, you can look at some dividend yielding stocks, but you have to say at what cost if the actual price of that stock goes down. So I look at more non cyclicals is what we're telling them. And of course commodities, if you can stand to trade commodities, a lot of people don't have the appetite for it, but that's still really where it's going to be at, for the next couple of years? Michelle, what's the turning point for the market? How can we get back to a multi year bull market? What's it gonna take? That's a really great question Kristen because we need to see some real economic growth right now. Obviously we saw growth from a complete standstill during covid to coming back but we still haven't had things like infrastructure really improving industrial manufacturing really improving. Even though we saw strong retail sales of you adjusted according to the C. P. I. Was actually kind of negative. So what's gonna give us our next big boom? Is it going to be money that goes gets poured into really investing in the U. S. Economy? Well we have a labor market issue where people don't want to work. So I think our next growth could actually be more digital technology based but we're not quite there yet. So we're looking about 23 years before we start to say wow this economy is really strong on its own. All right, Michelle Schneider partner and director of trading research and education from market gauge dot com. Michelle, thank you.