By Doug Busch

With technology stocks showing signs of fatigue, investors might start rotating into more conservative sectors. Consumer staples like Walmart could be poised to benefit.

This sector has a number of things going for it beyond diversification: Concerns about a possible economic slowdown should benefit retailers known for value and bargains, and technical signals suggest future gains.

The weekly chart of the Consumer Staples Select Sector SPDR exchange-traded over the past year reveals a bullish ascending triangle forming. Since April, the ETF has carved out higher lows, while repeatedly hitting resistance near the $83 level. This consistent pressure suggests the fund is building momentum -- the ETF traded at $83.42 Wednesday. If that resistance finally breaks, a move toward the round $90 level could unfold by the fourth quarter.

Target's post-earnings stock drop on Wednesday won't help, but it's worth watching how the ETF's other top-10 holdings might move the needle. Walmart could be the remedy, with its own results coming Thursday morning.

While an exact apples-to-apples comparison between Walmart and Target might be a stretch, both are classified as discount retailers. The divergence in their stocks' performance this year is hard to ignore.

In 2025, Walmart has been a clear outperformer, up 12%, while Target has slumped 22%. Technicians tend not to believe too much in mean reversion, because once trends are in motion, they are more likely to remain in place rather than reverse. Expect this dynamic to continue.

Not surprisingly, Walmart stock was up 2% Wednesday, while Target's 8% slide made it the S&P 500's worst performer. Are market participants making a stance that the former is eating the latter's lunch? We will find out when Walmart posts its results.

Walmart, the world's 13th largest company by market value, reports earnings Thursday morning, and patience may pay. It's often prudent to wait for the numbers before establishing a position, but technically, the setup is constructive.

The stock recently broke above a bullish ascending triangle, with a key pivot aligning at the round $100 level. After multiple failed attempts, the fifth breakout attempt succeeded on Aug. 6, signaling fresh momentum. While the stock is now contending with resistance from an upside gap from the Feb. 19 session, that headwind might prove short-lived.

Importantly, the $100 level was retested late last week, and held. That's a textbook technical shift, with former resistance turning into support. If that support continues to hold, the bull case remains intact, and earnings could serve as the next catalyst for upside follow-through.

Walmart was trading at $102.16 Wednesday.

Among the top 10 holdings in the Consumer Staples Select Sector SPDR, Altria Group stands out as an increasingly attractive name. The stock is up 29% so far this year and boasts a generous 6% dividend yield, appealing to both growth and income-focused investors.

As with much of the consumer staples sector, bifurcation is evident, and Altria is clearly on the right side of it. Shares are trading at 52-week highs, while peer Philip Morris remains 8% below its own yearly peak and offers a dividend that's roughly half of Altria's.

Technically, Altria stock is showing strength. The chart reveals several rounded bottom patterns, and on Tuesday, Altria broke above a bull flag pivot at $66. With momentum building, a move toward $74 into year-end looks increasingly plausible.

Altria Group was trading at $67.66 Wednesday.

Write to Doug Busch at douglas.busch@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

August 20, 2025 13:01 ET (17:01 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.