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What the Microsoft earnings beat means for the market: Trader

Microsoft's earnings beat is a sign that technology stocks could be joining the market's outperformers, TradingAnalysis.com founder Todd Gordon said Wednesday.

If the tech sector is on the verge of turning, that would be a significant development for the overall market, according to Gordon, a CNBC contributor who trades on technical analysis.

Gordon said the breadth in the market has been strong, meaning the number of stocks moving higher is outnumbering those on the slide. That, he said, makes him want to remain bullish.

However, he noted technology has not participated in that trend in recent weeks. Apple and Netflix are "lost," while Google and Amazon.com have been doing the heavy lifting for the sector, he said.

"Everything is firing except technology. With Microsoft, we might now have technology joining the party here," he told CNBC's "Squawk Box."

Gordon has a 2,500 target on the S&P 500 over the next 12 months, though he said there is room for a pullback before then. The S&P closed slightly lower at 2,163.78 on Tuesday, though the index is up about 3 percent for July on pace for its fifth-straight monthly gain.

Tuesday's trading saw some of the lowest volume of the year. Gordon said he believes volume is down as the market consolidates in the early innings of the earnings season and as geopolitical uncertainty lingers.

Still, Gordon said he is not reading too much into recent market developments due to the weak volume.

To be sure, technology's underperformance is not the only headwind blowing through markets, Gordon told CNBC. The dollar appears poised to resume its rally following Tuesday's weak reading on consumer confidence in Germany in the wake of Britain's vote to leave the European Union.

A stronger dollar makes it tougher for U.S. multinationals to sell products overseas.

CNBC's Daniel Mescon and Chris Hayes contributed reporting to this story.