Earnings season turns its focus to retail this week.
Dow stocks Home Depot and Walmart join Lowe's, Macy's and Kohl's with reports out in the next few days. Those releases will shine a light on consumer spending during the pandemic.
"If you look at the places where [consumers] are spending money, we would put those into two big themes — cheap and easy. So, things that are lower cost because consumers are very concerned about spending right now, and things that can be easily delivered to them without them having to go out to stores," Gina Sanchez, CEO of Chantico Global and chief market strategist for Lido Advisors, told CNBC's "Trading Nation" on Monday.
E-commerce sales have soared during the pandemic. Online spending increased by nearly 32% in the second quarter from the first three months in the year, according to the U.S. Census Bureau.
"Right at the cross section of that is a name like Walmart," said Sanchez. "This is a name that's probably going to have some negative news this earnings quarter. We're seeing a lot more … pantry restocking again, which are very, very low-margin paper products, so that might squeeze profitability. But, you know, we see that Walmart like many other names that have gotten their e-commerce game going have really benefited from being able to deliver right to people's homes."
Walmart is one of the best Dow stocks this year, rising by 28%. The company is set to report earnings before the bell Tuesday. Profit is expected to tick higher to $1.18 a share in its third quarter ended October, up from $1.16 a year earlier, according to analysts surveyed by FactSet.
Ari Wald, head of technical analysis at Oppenheimer, is also bullish on Walmart, which he sees as benefiting from broad tailwinds in food retailing.
"Another standout for us, one that is reporting on Thursday, would be BJs Wholesale," Wald said during the same "Trading Nation" segment.
Wald noted that its technical setup also looks positive for BJs. Shares have already risen more than 80% in 2020.
"It really kind of started acting favorably and trading well when it reported first-quarter earnings back in May, and on the reaction to that release, it broke through big resistance above its 2018 peak. The stock went on to continue to rally, it peaked in August, and has since corrected back into the rising slope of its 200-day average," Wald said.
That pullback presents "near-term opportunity to buy long-term strength," he said. "We think the breakout is still intact, and we think a stock like that is positioned to make a new high above its $47 August high."
BJs, set to report Thursday morning, is expected to post profit of 65 cents a share, up from 41 cents a year earlier.
Disclosure: Lido Advisors holds shares of Walmart.